Multiples paid at the acquisition

Viewing 1 post (of 1 total)
  • Author
    Posts
  • #99864
    Olena Kosobutska
    Participant

    You have an M&A transaction, where you are acquiring fast growing company and you pay part of the Purchase Price upfront and another part in earn-outs over 3 years period.
    The total Purchase Price you pay for that business is amount paid upfront + sum of earn-out to be paid over 3 years period
    Now, if it is a fast growing company, revenue is year before the acquisition will be significantly lower, that in year 2-3 post acquisition, so if you calculate Sales / EBITDA multiple by dividing total Purchase Price by the base year Revenue / EBITDA you multiple will be very high.
    So what is the right way to calculate Sales / EBITDA multiple in such scenario?

Viewing 1 post (of 1 total)
  • You must be logged in to reply to this topic.

Are you sure you
want to log out?

Book a Demo

Book a Demo

    Request a Brochure

      Request a Brochure

      Contact us to discuss your goals and needs!

      Contact us to discuss your goals and needs!

      In order to become a charterholder you need to complete one of the IMAA programs