Private Equity Questions

What People Say

I would recommend Adler & Company to anyone seeking to sell their business.

David Howe
Executive Vice President

VU Media Duplication, Inc.

Free Assessment

How have these PE buyers affected the value of my company?

All of the new capital that has been committed for investments in U.S. companies has resulted in an increase in the value of most middle market companies across the country and, to some extent now, even in Canada. A seller's market now clearly exists for companies earning over $1 million annually in a broad range of industries. The seller's market is particularly apparent for growing companies with earning exceeding $5 million.

How much is my company worth?

Adler & Company will provide business owners with a preliminary opinion regarding the value a PE firm is likely to place on their company. In general, profitable companies sell for a multiple of their earnings, defined as either Earnings Before Interest and Taxes (EBIT) or Earnings Before Interest Taxes Depreciation & Amortization (EBITDA). Multiples can range from as low as 3 or 4 times EBITDA to over 10 times, depending upon factors such as:

  • Industry
  • Projected growth rate of earnings
  • Barriers to Entry
  • Profit margins (the higher the better)
  • Customer Concentration
  • Market share / market dominance of company
  • Strength of Balance Sheet
  • Depth of in-place management team

2012 Valuation Multiples Near the 2008 Record high

Valuation multiples have risen steadily over the last three years and are now close to the record highs they reached of 9.5 times trailing EBITDA (earnings before interest, taxes, depreciation and amortization) in 2008. Although the average multiple fell in 2009, it has increased by 40% since.