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