How Much Do You Get Paid for Growth?

Over a 20-year period, growth equity names grew their revenue at an average of 46%, which was over three times faster than middle market names./nThe average EV to sales ratio for growth equity names over the same period was 8.4 times, while for middle market names it was 4.8 times, indicating a narrower range between sales multiples despite the significant difference in growth rates./nThe charts presented highlight the importance of considering both growth rates and revenue multiples when evaluating the value of a business, as growth alone may not lead to significant compensation./nIn a tough market, growth cannot necessarily save a business, emphasizing the need for a comprehensive analysis beyond growth potential.