WACC by Sector: 2025-2026 Benchmarks
Reference table of weighted average cost of capital (WACC) by sector for SMEs. Data based on Damodaran regional sector betas, risk-free rate, and market risk premium.
Updated 5 June 2026
In 2026, SME WACC typically ranges from 7% to 16% depending on the sector. Telecommunications shows the lowest rates (7% to 10%), Software / SaaS the highest (12% to 16%); most sectors (manufacturing, construction, B2B services, healthcare) sit between 10% and 14%. These ranges are computed with the formula Rf + βL × ERP + size premium, from 10-year government bond yields, Damodaran sector betas (January 2026) and a size premium calibrated on the Argos Index. The full per-sector table is below; the dataset is freely downloadable (CC-BY license, DOI 10.5281/zenodo.20640572).
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 the 10-year government bond - the UK Gilt yields 4.88% in Jun 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 11 sectors covered. The betas shown use the Europe region; for other supported countries (US, Japan, emerging markets), ValorSME automatically selects the appropriate regional beta. Data is calibrated to Damodaran benchmarks (January 2026), Argos Index SME/mid-market transactions (2023-2025), and Kroll size premiums.
| Sector | βU | WACC | EV/EBITDA | EBITDA Margin |
|---|---|---|---|---|
Services B2B / ConseilBusiness & Consumer Services | 0.71 | 10–14 %default: 12.0 % | 5x–8x | 15–25 % |
Software / SaaSSoftware (System & Application) | 0.96 | 12–16 %default: 14.0 % | 8x–15x | 20–40 % |
Technologie (hardware)Computers/Peripherals | 1.18 | 9–13 %default: 11.0 % | 7x–12x | 8–18 % |
Industrie / ManufacturierMachinery | 1.08 | 10–13 %default: 11.5 % | 5x–7x | 10–15 % |
Construction / BTPEngineering/Construction | 0.80 | 10–13 %default: 11.5 % | 4x–6x | 8–12 % |
Logistique & transportTransportation | 0.54 | 8–11 %default: 9.5 % | 5x–8x | 8–18 % |
Distribution / CommerceRetail (Distributors) | 0.64 | 9–12 %default: 10.5 % | 4x–6x | 5–10 % |
Santé / PharmaHealthcare Support Services | 0.64 | 10–14 %default: 12.0 % | 7x–10x | 15–25 % |
AgroalimentaireFood Processing | 0.38 | 8–11 %default: 9.5 % | 4x–6x | 8–12 % |
Hôtellerie & restaurationRestaurant/Dining | 0.59 | 8–12 %default: 10.0 % | 5x–9x | 10–22 % |
TélécommunicationsTelecom. Services | 0.45 | 7–10 %default: 8.5 % | 6x–9x | 25–40 % |
Sources: Damodaran (regional sector betas, Jan. 2026), Market transaction data (2023-2025), Risk-free rate, Size premiums (2025). The WACC shown is adjusted by company size via log-linear interpolation (revenue €1M to €100M).
How to Read This Table
The βU (unlevered beta) column measures sector systematic risk, independent of financial structure. A beta of 0.91 (Software/SaaS) means the sector is slightly less volatile than the European market. A beta of 0.37 (Agribusiness) means it is 63% less volatile.
The WACC column gives the cost of capital range for the sector. The upper bound applies to micro-SMEs (revenue < €2M) and the lower bound to mid-market companies (revenue > €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 €2M carry a +3% size premium; €2–10M get +2%; €10–50M get +1.5%; above €50M get +1%. The brackets are calibrated to align European SME WACCs with the multiples observed in Argos Index transactions (8.3–9.5× EBITDA mid-market, 2023–2025), cross-checked against Kroll CRSP Decile 10 and French M&A practice (CCEF, Vernimmen).
- 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.
Frequently asked questions
What is a typical WACC for an SME in 2026?
Between 7% and 16% depending on the sector. Most sectors (manufacturing, construction, B2B services, healthcare) fall between 10% and 14%. The exact per-sector ranges are computed from 10-year government bond yields, Damodaran sector betas and an SME size premium.
Which sector has the lowest and the highest WACC?
Telecommunications has the lowest WACC (7% to 10%), thanks to recurring cash flows and a low sector beta. Software / SaaS has the highest (12% to 16%), reflecting a high beta and a marked size premium.
Why is the WACC of an SME higher than that of a large listed company?
Because of the size premium: illiquidity, key-person dependency and customer concentration add +1 to +3 points of WACC depending on revenue. A large listed company finances itself at around 7-10%, an SME between 9% and 16%.
How is this sector WACC calculated?
With the formula Rf + levered beta x ERP + size premium: 10-year government bond yield, relevered Damodaran sector beta, equity risk premium, plus a size premium calibrated on Argos Index mid-market transactions. The full dataset is freely available (CC-BY license, DOI 10.5281/zenodo.20640572).
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. For the full WACC matrix across all 11 sectors and 10 countries (with downloadable CSV/JSON), see our valuation benchmarks data hub. Ready to calculate your own valuation? Launch a free simulation →
Calculate the WACC for your company
Textbook formula applied to your sector, size and country: Rf + βL × ERP + size premium, 11 sectors calibrated on Damodaran and Argos data.
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