Glossary · Ownership
What is Valuation multiple
Definition
The figure applied to profit to value a recruitment business — typically 4x to 7x EBIT, higher for contract-heavy, recurring books.
Applies to: US and UK · Reviewed by James Doyle
In practice
Contract-heavy agencies with sticky clients and high redeployment trade at the top of the range. Perm-only books with founder-dependent billing trade at the bottom.
Client concentration is the biggest single discount. One client above a third of gross profit will move a multiple before any growth story does.
Related terms
Earn-out
Part of a sale price paid later, conditional on the business hitting agreed performance targets after completion.
ReadEquity stake
The share of a launch business owned by each party. In a backed recruitment launch it defines control, exit proceeds and who decides what.
ReadGross margin
The share of the bill rate left after paying the contractor and their employment burden. It is the money the agency actually runs on.
Read
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