The Market Multiples Valuation model is the quickest way to value a business. This method brings supportable structure to the Rule of Thumb approach of selecting a key metric like Sales or EBITDA and applying an acceptable multiple to it. The key features of this approach are:

  1. There is a key financial metric that captures value for this business such as Sales, Operating Profit, EBIT, Net Income, etc.
  2. There is an established industry standard for the multiple that applies to the average business in this industry
  3. The operations of this business justify a multiple at, above, or below that industry average