Determining the Price
Question
How do I determine the value and price I should pay for a company?Answer
Each industry ends up with fairly standard valuation "multiples", the multiple of earnings or EBITDA that small private companies have historically fetched when they are sold in the industry. These deal values are typically tracked by market research firms and investment banks and compiled into research reports for potential clients. You can also triangulate on the price based on what companies are listed for and sold -- check on web-based business broker sites or call a few business brokers that deal with your target industry for their input.
- November 14, 2011
- Buying a Company
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