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Number one valuation factor is growth, and how much you can assure the growth. Ultimately the buyer is looking at future cash flow versus risk of getting there
by nicholas73 14y ago
Number one valuation factor is growth, and how much you can assure the growth. Ultimately the buyer is looking at future cash flow versus risk of getting there, plus some compounded discount based upon where else he could park his money and earn a return.
In simple terms, the value will be some multiple of profit. The best blue chip companies get about 10x plus dividend. You are not a secure bet so you might get 3x to as little as 1x. Plus someone might have to manage the business which eats into profit.
But, the best growth companies could get 20, 30, 50x+. So your job is to argue growth.
Ultimately however, you shouldn't calculate a value. The above should just determine a minimum. You need to figure out what your business is worth to the acquirer.