Europe vs North America: The Persistent Valuation Gap

Anyone benchmarking a European company against US comparables meets the same problem: the multiples do not transfer. The difference is persistent enough that ignoring it is a modelling error rather than a rounding issue.

How large the gap is

On our published basis at 30 June 2025, the European median sits at 3.0x EV/Sales and 12 to 18.5x EV/EBITDA, against North America at 3.6x and 12.5 to 19.5x.

That is roughly a sixth lower on revenue multiples, applied across sectors rather than concentrated in one. A US multiple used unadjusted on a European business overstates value by about that much before any company-specific judgement is made.

Why it persists

Exit depth. The US has more acquirers, larger ones, and a more active listing route. A wider set of plausible buyers raises the price a seller can hold out for.

Capital availability. More capital chasing the same asset raises entry prices, and later-stage capital in particular is thinner in Europe.

Fragmentation. A European company scaling across markets faces different languages, regulations and payment habits. The same revenue takes more effort to reach.

Currency and rate differences feed directly into discount rates, and therefore into multiples.

It is not a judgement on the companies

This is worth stating plainly because the gap is often read as a verdict. It is not. The same business, with the same growth and margins, is worth less in a market with fewer buyers and less capital.

That is a statement about the market, not the management. It also means the gap can narrow when those conditions change, and it has narrowed in some sectors.

Applying the adjustment properly

Adjust the benchmark for region before you apply company-specific judgement, not after. Mixing the two produces a number nobody can reconstruct.

State the adjustment in the file with its source. A reviewer who sees a US peer set and a European company will look for it, and its absence is the finding.

And resist the temptation to argue it away for a specific company. If the business genuinely has US-level exit options, that belongs in the company-specific step, documented separately.