Peter Vander WallFounder driving creative community growth

Your Profit Isn't the Only Thing That Grows

Name: Your Profit Isn't the Only Thing That Grows
Uploaded: 2025-09-22T17:01:39+00:00
Duration: 1 min 1 s
Channel: Peter Vander Wall
Description: Short YouTube talk explaining how service businesses (e.g., accounting firms, marketing agencies) are valued using EBITDA multiples. The speaker sketches…

22 Sept 2025 · 1 min

Watch on YouTube

1:01

Short YouTube talk explaining how service businesses (e.g., accounting firms, marketing agencies) are valued using EBITDA multiples. The speaker sketches that smaller profits (e.g., $1M) typically attract low multiples (2–3x) while much larger profits (e.g., $10M) can attract far higher multiples (8–10x), producing disproportionately large increases in business valuation as profit scales.

Chapters

Disclaimer. I've never built $100 million business, but I have talked to people who have, and here's some quick math that they used. So let's say you're a service business, right? Maybe an accounting firm or a marketing agency. The way those businesses are usually valued is as a multiple of ebitda. What does that mean? Basically, you'll get a certain multiple on the profit that the business has left over at the end of the year. So if you're making $1 million a year in profit, you might get a 2 to 3x multiple on that. And so the value of the business is 2 to 3 million dollars. Now, as the business get that multiple also increases. So, for example, if you do $10 million a year in profit, your multiple isn't 2 to 3x. Your multiple is more like 8 to 10x. And so you can see a business that makes $10 million a year in profit could be worth more like 80 to $100 million. And so this is the play these guys use. You get to a certain scale and your multiple starts to like, exponentially increase. If you double the profit your business makes, that might not just double the value of the business, that might triple, quadruple, that might quintuple the value.