M&A negotiations can become acrimonious when you get to finalising detailed documentation. This often arises due to surprises in DD or differences in understanding of a letter of offer, or, the letter of offer misses important items. This may cause delays and changes to price with the deal eventually called off. Significant costs are incurred […]
Business Sale Price Multiples
Business sale price multiples are functions of “factors” such as earnings, EBITDA, EBIT, revenue or some other multiplier, neither of which are “set in stone” and are not precise. Factors and multiples vary with every business sale depending on many issues and the structure of each unique business deal. In pricing a business using EBITDA […]
Comparing EBITDA Multiples and PE Ratios
Clients may directly compare the PE ratio (price/earnings ratio) of listed companies to an EBITDA multiple (multiple of earnings before interest tax depreciation and amortisation) of a private company to establish an enterprise value. This is done to understand relative values due to the known market value of a similar listed business. This is often done without understanding that comparing […]
EBIT Multiples and Growth
EBIT Multiples and growth are an ongoing question for many owners looking to sell or buyers looking to buy a company. What EBIT multiple is applicable to my company, what is my company worth, my company is growing or is about to grow; how is the price affected? If the company has been growing, up to what point in the growth […]
Understanding business value from the Buyer’s point of view
Whilst deal price may understandably rank highly with the Seller, business value from the Buyer’s point of view will place intangibles and future opportunity firmly at the top of his list. As Albert Einstein once said, “Not everything that can be counted counts; and not everything that counts can be counted.” To optimise a deal, the Seller needs […]