M&A Talk: #1 Podcast on Selling a Business For New Sellers: Mastering EBITDA Multiples
Oct 10, 2024
In this insightful discussion, Kevin Moyer, an expert in business valuation and M&A, dives into the critical world of EBITDA multiples and their pivotal role in company valuation. He explains how these multiples vary by industry and the importance of accurate adjustments. The conversation touches on the influence of Capital Expenditures on EBITDA, the need for recent market data, and how net working capital affects purchase price calculations. Moyer also emphasizes the common pitfalls to avoid for sellers aiming to maximize their business value.
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What An EBITDA Multiple Measures
- EBITDA multiples compare enterprise value to current or run-rate EBITDA to gauge market value.
- Kevin Moyer says adjusted EBITDA is commonly used to align with precedent transactions.
Why Buyers Use Multiples Over DCF
- Multiples anchor valuation to precedent transactions and give buyers a market-based baseline.
- Kevin Moyer warns DCF can be speculative while multiples offer a more current-state, market-referenced view.
Don’t Rely On Noisy Multiple Data
- Verify your multiple data and avoid relying on noisy internet ranges.
- Kevin Moyer advises using trusted software or reputable data to avoid mispricing offers.