Understanding multiple of EBITDA calculations.
There are many techniques used to estimate business value, but the technique most familiar to small business owners is the multiple of EBITDA represented by this basic formula:
EBITDA x Multiple = Business value
When you sell your company, you’re likely to find yourself negotiating with sophisticated buyers. Business buyers have several advantages over sellers, which you’ll have to overcome when negotiating a sale.
If you could start by sketching your team on a blank piece of paper, would it resemble in any way the structure you have today? Would the design you come up with still be relevant considering the rapid changes brought about by the ongoing pandemic? Digitization has become a realistic goal for CFOs and their teams to remain highly relevant, especially when there is an ever more pressing need to react quickly.
The COVID-19 pandemic drove the need for many finance functions to transform. CFOs pivoted to deal with the crisis, finding new tools and ways of working to facilitate their finance transformation. However, the results have not always equaled the desired outcome. Turning finance transformation objectives into reality is a hard, thoughtful work.
The past 3 years has put us all under immense pressure, but it’s also made us more open to meaningful transformation.
As the old saying goes, “No crisis should go to waste”.
