071 - Three ways to value a business
We used to make elaborate valuations to clients, sometimes using 6-8 different methods to value a business. Some clients need this sophistication and are willing to pay for it. However, there are really three main ways to value a business.
The first one is the market-based valuation. Based on a multiple of a metric, which could be revenue, net profit, EBIT (Earnings before Interest and Tax) and most frequently EBITDA (EBIT plus Depreciation and Amortization). EBITDA is the best proxy for