In general terms, when buying or selling companies with an EBITDA greater than 2.5 mm but only 1 mm, EBITDA is usually a useful metric to start with the value of the company. If a company is in a high-growth market, it can expect a significant acquisition premium (an offer to buy several times higher than its most recent EBITDA). In general, the multiple used is four to six times the EBITDA. Value generators are internal characteristics of a company that buyers look for in acquisitions.
You'll realize that no matter if you plan to keep your company forever, become part of your family, sell it to your management team, or find an outside buyer, value creation factors can offer you more options, more flexibility, and get more money from your property interests. Strong value drivers are those that are effective and will continue to work once the original owner leaves. Consequently, those are the value factors that increase both EBITDA and the multiple of EBITDA that buyers might be willing to pay. There are only a few ways to sell and value a company quickly in California, and an experienced business broker like Andrew Rogerson can guide you through the best strategy.
