Q4 Private Company Market Update: Valuations Ease as Sector Differences Persist
- Ernest Bednarz
- 6 days ago
- 3 min read
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As 2025 comes to a close, private company valuation data for Q4 2025 points to a market that is stabilizing, but not accelerating. While valuation multiples remain healthy by historical standards, modest softening in profitability and widening differences across sectors and company sizes continue to shape transaction outcomes.
EBITDA Multiples Stabilize After Recent Softening
Median private company EBITDA multiples edged slightly lower in Q4 2025, declining to 3.7x from 3.8x in the prior quarter. This modest easing follows a period of recovery earlier in the year after valuations dipped sharply in late 2024. While multiples are no longer expanding, they remain well above the lows seen in early 2022, indicating that private market valuations have largely stabilized. The trailing three-quarter average suggests a market that has found balance, with buyers remaining active but increasingly disciplined on price.
Profitability Continues to Moderate
Median EBITDA margins declined further in Q4 2025, falling to 14% from 15% in the previous quarter and down from a recent peak of 18% in Q2 2024. Although margins remain stronger than pre-pandemic levels, the downward trend reflects ongoing cost pressures, including labour, financing, and input costs.
This softening in profitability is increasingly influencing valuation outcomes, as buyers place greater emphasis on sustainable earnings rather than top-line growth alone.
Sector Differences Remain Pronounced
Valuation multiples continue to vary widely by industry. On an all-time basis, the Information and Utilities sectors command the highest EBITDA multiples, reflecting strong investor demand for scalable and capital-efficient business models. At the lower end of the spectrum, Accommodation and Food Services and Other Services continue to trade at more modest multiples.
Over the most recent 12-month period, the Information sector stands out with a notable increase relative to its historical average, reinforcing the importance of sector exposure in determining valuation.
Long-Term Trends Highlight Uneven Recovery Across Industries
A longer-term view of sector EBITDA multiples shows that valuation recovery has been uneven across industries. While some sectors have rebounded meaningfully since the 2022 downturn, others have struggled to regain prior highs.
In 2025, year-to-date, several sectors experienced moderate increases in EBITDA multiples, while others saw continued pressure. This ten-year trend underscores that valuation outcomes are highly dependent on timing, sector dynamics, and company-specific fundamentals rather than broader market conditions alone.
Closing Thoughts
Together, these indicators point to a private market that is stable but increasingly selective. Valuation multiples remain supported, but moderating profitability and persistent sector differences are playing a larger role in shaping transaction outcomes.
For business owners, understanding how their company compares within its specific industry and how earnings quality aligns with buyer expectations is critical. In this environment, thoughtful preparation and informed valuation analysis remain key to achieving successful outcomes.
Data source: DealStats Value Index (Q4 2025) - The DealStats Value Index summarizes valuation multiples and profit margins for private companies that were sold over the past several quarters. Business Valuation Resources (BVR) captures this private company transaction data in its DealStats platform.
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When owners need to leverage, sell or reorganize their assets, we answer the age-old question "What is it worth?".
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