Businesses are typically valued as a multiple of EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization). EBITDA is a shorthand for pre-tax cash flows. Theoretically, it may not be correct to use EBITDA, but it is the industry standard.

EBITDA multiples can range from a low of 2x-3x to 15x-20x or above. Most profitable e-Commerce businesses sell for between 5x and 15x EBITDA.

What drives the difference?