People talk about multiples of revenue. Sure, one can take any price and divide it by the annual revenue of a business and obtain a revenue multiple. A $1 million sale price divided by $750,000 in annual revenue equals a 1.33 revenue multiple. Right? Nothing...
A recent survey conducted by the Alliance of Merger & Acquisition Advisors (AM&AA) shows deal volumes accelerating. Their bi-annual survey of U.S. M&A advisors shows deal volumes up 19% in the first six months of 2012, compared to same period in 2011. Benchmarked to the...
Question: What is the industry valuation multiple for the commercial heat treat industry? Also, is there a chart somewhere of the trends in multiples through the years?...
Business owners hold something of value -- ownership in a business. And, in the life of an owner, there typically comes a time when he/she becomes willing to part with his ownership in exchange for some things he/she values. Typically, the thing of value is...
We all have heard that companies sell on "multiples of earnings." As such, the talk at the country club or trade conference has quickly moved to who sold for the highest multiple. We hear the multiples, but we almost never hear the definition of...
The buyer of a business, having selected his minimum required rate of return, justifies purchase price of a "going concern" by the cash he expects the business to generate....
In an attempt to project what the future might hold for a business, the buyer looks at many things. One is past performance of the business. Historical income statements provide useful, factual information about income, expense and resulting profit for particular periods of time. Given...
When we estimate the value of a business, we are estimating the price at which it could be sold. Of course, buyers will only buy a business when it makes "financial sense" to do so. A purchase makes financial sense when the proposed price and...
The majority owner of a business was presented with a new business opportunity that was not exactly related to that of his core business. He had lots of questions and asked for our help. This case study will walk you through the simple analysis that...
Business valuation can be complex. But as with most projects a good start is to build a solid foundation. The foundation of a good appraisal will be the answers to four simple questions....
Want to know the value of your business? Pose the question to your closest friends and advisors. First, write your answer down. You will be amazed at the range of responses. Go one step further and ask each person how their answer was determined....
Question: How will the IRS value my estate when I die?...
Buyers of private companies purchase businesses for the profit they generate, or can generate. They look at the past as an indicator of the business' ability to generate cash or profits. They also look at the value of the assets, liabilities and equity of...