Private Equity Explained - Kyle Coots - Episode 44
Self-Funded With Spencer
00:00
A Multiplier to Value a Business
The value of a business, again, I'm generalizing here. Is the present value of its future cash flows. And so in order to kind of have a shorthand look at a value of abusiness, we use a multiple. Every industry is a little bit different. There's some industries that are going to be a multiple of cash flow. The riskier you are, the higher the rate, the lower the value of the business. A multiplier plays into how confidently can I project growth for your business? How much debt could you put on it? How much would a bank give you?
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