WACC by Sector: 2025-2026 Benchmarks
Reference table of weighted average cost of capital (WACC) by sector for SMEs. Data based on Damodaran Europe betas, risk-free rate, and market risk premium.
What is WACC?
The WACC - Weighted Average Cost of Capital - is the discount rate used in the DCF method. It represents the minimum return expected by all capital providers (shareholders and creditors) to compensate for the risk they take in financing the company.
For SMEs, the WACC incorporates three main components: the risk-free rate (typically 10-year government bond, ~3.35% in early 2026), the market risk premium (~5% per Damodaran), and additional premiums related to company size and illiquidity. The typical WACC for an SME ranges between 9% and 16%, compared to 7-10% for large listed companies.
Sector Reference Table
This table presents WACC ranges, unlevered betas, and EV/EBITDA multiples for the 7 sectors covered. Data is calibrated to Damodaran Europe benchmarks (January 2025), SME/mid-market transactions (2023-2025), and size premiums from 2025.
| Sector | Ξ²U | WACC | EV/EBITDA | EBITDA Margin |
|---|---|---|---|---|
Services B2B / ConseilBusiness Services | 0.72 | 10β14 %default: 12.0 % | 5xβ8x | 15β25 % |
Software / SaaSSoftware (System & App.) | 1.17 | 12β16 %default: 14.0 % | 8xβ15x | 20β40 % |
Industrie / ManufacturierMachinery | 0.88 | 10β13 %default: 11.5 % | 5xβ7x | 10β15 % |
Distribution / CommerceWholesale (Non-durables) | 0.73 | 9β12 %default: 10.5 % | 4xβ6x | 5β10 % |
Construction / BTPEngineering/Construction | 0.89 | 10β13 %default: 11.5 % | 4xβ6x | 8β12 % |
SantΓ© / PharmaHealthcare Services | 0.67 | 10β14 %default: 12.0 % | 7xβ10x | 15β25 % |
AgroalimentaireFood Processing | 0.59 | 8β11 %default: 9.5 % | 4xβ6x | 8β12 % |
Sources: Damodaran (Europe betas, Jan. 2025), Market transaction data (2023-2025), Risk-free rate, Size premiums (2025). The WACC shown is adjusted by company size via log-linear interpolation (revenue β¬1M to β¬100M).
How to Read This Table
The Ξ²U (unlevered beta) column measures sector systematic risk, independent of financial structure. A beta of 1.17 (Software/SaaS) means the sector is 17% more volatile than the European market. A beta of 0.59 (Agribusiness) means it is 41% less volatile.
The WACC column gives the cost of capital range for the sector. The upper bound applies to micro-SMEs (revenue < β¬2M) and the lower bound to mid-market companies (revenue > β¬50M). ValorSME automatically adjusts WACC based on company revenue via log-linear interpolation.
The EV/EBITDA column indicates the median valuation multiple observed in recent transactions. An 11.5x multiple for SaaS reflects the premium for recurring revenue and model scalability.
Factors That Vary an SME's WACC
Beyond sector, several factors influence an SME's specific WACC:
- Size (revenue) - SMEs under β¬2M revenue carry a size premium of +1.5 to +2%, versus +0 to +0.5% for mid-market.
- Financial structure - High leverage increases levered beta and cost of equity, but reduces overall WACC through tax benefits of debt.
- Cash flow visibility - Recurring contracts (subscriptions, maintenance) reduce perceived risk and justify lower WACC.
- Key person dependency - Heavy concentration of expertise or client relationships on a single person increases risk.
Learn More
To understand how these parameters integrate into a complete valuation, consult our guide on the DCF method for SMEs. If you run a tech company, our article onvaluing SaaS businesses details the specifics of that sector. Ready to calculate your own valuation? Launch a free simulation β
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