Community Spotlight

Q&A: Don Bravaldo on Why Similar Businesses Can Sell at Different Multiples

Two companies can operate in the same industry, generate similar earnings, and still attract different valuations. The difference can come from what the buyer intends to do with each business.  

Don Bravaldo, president of Bravaldo Capital Advisors, has advised privately held lower-middle-market businesses on M&A and corporate finance since taking the firm’s helm in 2011. He points to a distinction that average acquisition multiples can obscure: buyers value a business partly according to whether it will support future acquisitions or join an existing platform.

GF Data tracked 80 completed transactions in the first quarter of 2026, with an average valuation of 7.3x adjusted EBITDA. Platform acquisitions averaged 7.6x, while add-on acquisitions averaged 6.5x. That creates a 1.1x gap in annual adjusted EBITDA. Platform multiples rose from 7.2x in 2025 to 7.6x in the first quarter of 2026. Add-on multiples declined from 6.9x to 6.5x over the same period. 

Bravaldo attributes part of the difference to financing conditions. Interest rates on senior debt used to finance platform acquisitions fell by about 0.85 percentage points. Total platform leverage reached 3.9x EBITDA, including 3.3x senior debt. Lower borrowing costs and greater debt capacity can give a buyer more room to fund an acquisition while maintaining its expected return.

For a seller, a deal in the same industry is only a starting point for comparison. A useful benchmark also accounts for the company’s size, how its earnings were calculated, the strength of its management team, and the buyer’s plans for it. Borrowing costs and loan availability may also have changed since that transaction closed.

It also changes the questions an owner can ask prospective buyers. Will the existing leadership team remain responsible for the business? Does the buyer plan to make further acquisitions through it? Which functions would remain independent, and which would move into an existing operation? The answers help explain how the buyer is evaluating the company and where it expects the investment’s return to come from.

Before using a market average to set expectations, an owner needs to understand what a buyer sees in the business and how it plans to finance that vision. Two companies can enter the same sale market and face different pricing because their buyers are underwriting different futures.

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Governance Feed

1. BABF Journal reports that margins on some asset-based loans have fallen by 75-80 basis points, with lenders competing for borrowers backed by readily collectible receivables and saleable inventory. That collateral gives lenders a source of repayment if the business defaults, helping support better pricing even as benchmark rates remain elevated. For buyers, the quality of those assets can affect how much working-capital financing is available after closing, preserving cash for operations. But with the Federal Reserve’s benchmark range at 3.75%-4.00%, a narrower margin still leaves the business with substantial interest costs to cover.

2. U.S. unemployment remains low at 4.2%, but companies are hiring slowly, and workers are changing jobs less often, according to Reuters. The labor force remains below its peak of 171.5 million, while inflation-adjusted disposable-income growth is below 2%. That combination matters when evaluating a business whose growth depends on adding employees or selling discretionary services.

3. The U.S. Chamber of Commerce reports that 66% of small businesses now use AI, up from 58% a year earlier. AI users were at least seven percentage points more likely to report growth in sales, profits, and employment, while 95% were working to upskill employees. For owners preparing to sell, this makes technology and staff training part of the business a buyer will assess. Buyers, in turn, need to understand whether those tools support current earnings and what further investment the business requires.

4. Citizens’ survey of 500 U.S. business decision-makers found that 54% expect revenue to rise over the next three months, while 83% plan to maintain or increase full-time headcount. That optimism comes alongside a shift in spending: among businesses that use AI regularly across multiple functions, 94% have reduced or eliminated spending on at least one outside service, including marketing (60%), data analysis and reporting (39%), and bookkeeping or accounting (38%).

Thesis Principle

A seller note spreads the purchase price over several years, and Section 453 can spread the tax the same way. With a three- to five-year note charging 7% to 9% interest, the seller can spread that gain across several tax years, while interest is taxed separately. The benefit may be greater if the seller expects to be in a lower tax bracket after leaving the business. Some amounts, including depreciation recapture, may still be taxable in the year of sale. A CPA should model the payment schedule and applicable tax treatment before the seller signs the LOI.

Resources & Events

📅 2026 Rocky Mountain ETA Conference (Boulder, CO - November 7, 2026)

Hosted by the University of Colorado Leeds School of Business in collaboration with Denver ETA Meetup and several Colorado universities, the Rocky Mountain ETA Conference brings together search fund entrepreneurs, students, investors, service providers, faculty, and other participants in the ETA ecosystem. The full-day program features introductory and advanced tracks covering acquisition entrepreneurship, deal activity, and opportunities in the ETA market, with workshops designed to strengthen participants’ understanding and practice of acquiring and operating businesses.

📅 Iowa Family Business Conference (Pella, IA - November 11, 2026)

Hosted by the University of Northern Iowa Family Business Center, the Iowa Family Business Conference is a one-day event dedicated exclusively to multigenerational family-owned businesses. The 2026 program, held at Vermeer Corporation’s Museum and Global Pavilion, covers next-generation leadership, family-business governance, succession planning, family councils, branding, and preparing for unexpected leadership transitions. The conference will feature Adam Farver, Chairman of Pella Corporation, as its keynote speaker, alongside family-business leaders and advisors from across Iowa.

📊 Report Spotlight: NACD Q3 2026 Private Company Quarterly Survey (NACD)

NACD’s Q3 2026 survey asked 68 private-company directors about their board priorities for the coming quarter. AI led at 72%, followed by shifting economic conditions at 53%, cybersecurity at 38%, competition for talent at 35%, and regulation at 32%. Directors highlighted pressure to demonstrate AI returns, skilled worker shortages, and the loss of experience as employees retire. Regulatory requirements rose from outside the top 10 in Q2 to the fifth-largest concern.

For the Commute

Finding the Entry Point Into AI's Hyperscale Buildout (Middle Market Growth)

In this episode, Brown Gibbons Lang & Company’s Brian Thom and Ryan Gillis discuss where middle-market opportunities are emerging around the massive U.S. data-center buildout. The conversation covers the suppliers, contractors, and specialized service businesses supporting that investment, with more than 1,500 U.S. data centers reportedly under development. For owners in industrial, infrastructure, and specialized services businesses, the takeaway is to look beyond the primary investment and identify the secondary demand it creates for companies that make the larger projects possible.