In his April column, Jim Huston laid out the Wall Street model of valuing companies with high revenues.
You can download an Excel file here that illustrates the model in action.
The first scenario is for a highly profitable company (EBIDTA is 25.1%). The second is for a company with normal earnings (EBIDTA is 15.1%). The resulting value of the highly profitable company is double that of the less profitable one. While application of the EBIDTA evaluation model may vary from one consolidator to another, and the industry multiplier may be adjusted for specific situations, the basic process is the same.
Explore the April 2010 Issue
Check out more from this issue and find your next story to read.
Latest from Lawn & Landscape
- Massey Services has acquired Solve Pest Pros of Jacksonville, North Carolina
- Takeuchi-US names Lisitza, Dickerson as regional managers
- New Holland debuts Workmaster 35C and 40C compact tractors
- February reveals cracks in company culture
- Rotary Corporation names Brabandt as territory sales manager
- John Deere debuts 1 Series Compact Utility Tractors
- Virginia Green acquires Bio Turf
- Delegation: The Secret to Scaling Your Business
