The adage “one size fits all” clearly does not apply to the enterprise value of a target. In today’s hectic M & A environment, valuations vary widely based in large part on the target’s industry and the type of purchaser. No one measure of value applies across the board. Also, within various measures, such as a multiple of EBITDA and a multiple of gross revenues, wide ranges abound. For example, while EBITDA multiples of four to six are the historic norm and still apply to many industries, it is not unusual for multiples of EBITDA above ten and even between fifteen and twenty to be used to determine transaction value. The point is that it is important to know how companies in your industry are valued. The goal of the seller is to not have an overly rosy picture of value, which can lead to a potential transaction going nowhere, or to have too low a perception of value, which can lead to you selling your company short.
If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at firstname.lastname@example.org or 443-738-1522.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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