Elias' and Richard's points are the justification elements/tools around the negotiation - but ultimately its about getting enough people happy for the deal to consummate. A recent "mature services business" deal was around 3x ebit. That's a win-win in this financial climate.
In order to not give the wrong impression: this business had signicant revenues and the services were "productized" - A shop with a billable-hours programmers are unlikely see anything as good as this unless they have some IP of strategic value to the buyer. On Tue, Jun 9, 2009 at 1:21 PM, Richard Hayes <[email protected]> wrote: > > A quick and dirty valuation = Sales in three years = Future Value > > Present Value = FV less discount > > A reasonable rate should be between Year 3 Sales x .125 up to Year 3 > Sales x .343 > > Based upon 35% to 50% discount rate. > > On Jun 8, 2:24 pm, Elias Bizannes <[email protected]> wrote: > > Value can be determined by forecasting cashlows and the growth rate, > > as well as comparing similar businesses to triangulate the value. > > > > Value more specifically can be identified by: > > - contracts that can be transfered > > - relationships that can be leveraged > > - brand > > - tangiable assets > > > > It's hard to value intangiable assets and goodwill objectively (hence > > why the accounting standards don't recognise them unless you actually > > paid cash to acquire a business). But like any other business, it's > > fundamental valuation comes from the cashlows. > > > > So the question is: how much money can this business generate? And how > > much of it can be done (or only done) with the current staff of the > > business. If you can work that out, you've got half a Discounted > > Cashflow Model (a tool used to value companies). > > > > Sent from my iPhone > > > > On 08/06/2009, at 2:01 PM, Mick Liubinskas <[email protected]> wrote: > > > > > > > > > Any thoughts on valuation ranges for services based businesses? > > > > > x-y times revenue? > > > > > w-v times ebit? > > Richard Hayes > Carbon Free Solutions > 0414 618 425 > > > --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Silicon Beach Australia mailing list. No lurkers! It is expected that you introduce yourself: http://groups.google.com/group/silicon-beach-australia/browse_thread/thread/99938a0fbc691eeb To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -~----------~----~----~----~------~----~------~--~---
