{
  "title": "What is multiple arbitrage? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-is-multiple-arbitrage/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-24",
  "updated": "2026-10-24",
  "section": "Glossary",
  "keyword": "Multiple arbitrage",
  "short_answer": "Multiple arbitrage is the gain from buying businesses at a low multiple of earnings and later selling them, usually combined, at a higher multiple. The earnings do not have to grow; the value rises because a larger, better-run company is priced at more dollars per dollar of profit.",
  "facts": {
    "Strong: sold to a larger firm or PE buyer": [
      "8.0x",
      "$16,000,000",
      "$2,000,000 × (8.0 − 4.5) = $7,000,000"
    ],
    "Modest: sold to a local buyer": [
      "5.0x",
      "$10,000,000",
      "$2,000,000 × (5.0 − 4.5) = $1,000,000"
    ],
    "Weak: no premium for scale": [
      "4.0x",
      "$8,000,000",
      "$2,000,000 × (4.0 − 4.5) = −$1,000,000"
    ]
  },
  "sources": [
    "https://www.investopedia.com/terms/m/multiple.asp",
    "https://www.investor.gov/introduction-investing/investing-basics/glossary/private-placements"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}