The transfer price paid for companies is in many cases a multiplication of the operating result (EBITDA X factor). Within the M&A sector, this factor is often referred to as the multiple. With the multiple and the EBITDA, the enterprise value is determined; by deducting the cash and cash equivalents and debts respectively, the purchase price of the company is calculated.
This multiple can be obtained from several sources. One disadvantage of these sources, however, is that they almost only take the sector into account. A wholesaler with 8 employees that wants to make an exit gets the same multiple applied to it as one with 50 employees and a management team which is unchanged after the sale. The multiple could also be influenced by a higher absolute EBITDA.
The number of employees, the participation of management or an increase in EBITDA is virtually never taken into account in the traditional multiple valuation methods. Marktlink knows better than anyone else, through its more than 250 years of combined accumulated experience and over 1,000 successfully closed transactions that is precisely these three characteristics that are important into determining the right factor with which to multiply the company’s result.
Based on publicly available sources of multiples from the M&A world, extensive practical experience and valuation expertise, Marktlink has created a smart model: The Marktlink Multiple. With the Marktlink Multiple, you can determine the multiple and therefore the expected result if you were to sell that company. The valuation and results are calculated in a manner of seconds and presented to you immediately.
The Marktlink Multiple gets updated every three months with the latest data from the M&A industry. This way you are always guaranteed a current and representative multiple.
The Marktlink Multiple gives you an indicative result based on a limited number of criteria. Each case is unique, so we advise you to contact one of Marktlink’s M&A specialists to have a thorough vetting of your company to achieve a more in-depth accurate valuation.