15 Pillars of Valuation
The metrics and factors that ‘move the needle’ for EBITDA & sales multiples paid for private businesses
Valu8er calculates precise suggested EBITDA and sales multiples for private businesses by deploying its revolutionary technology and advanced algorithms, on a relative basis, to benchmark companies against comparables using these 15 Pillars of Valuation. The 15 Pillars are compared on a relative basis. Further, the importance of each pillar varies by industry (for example, factors such as subscriptions and scalability are not expected in certain industries, whereas they are valued heavily in service-based industries).
1. Revenue size
The larger, the better
2. Revenue growth rate
The larger, the better
3. Average revenue per employee
The larger, the better
4. EBITDA margins
The larger, the better
5. Industry forecasted growth rate
The larger, the better
6. Tangible asset backing
The larger, the better
7. Subscriptions, contracts or ARR
These factors increase multiples paid
8. Level of Technology / Automation
The more advanced, the more valuable
9. Scalability
The more scalable, the better
10. Difficult of industry entrance
The more difficult, the better
11. Working capital / cash-flow requirements
The smaller, the better
12. Level of owner reliance
The lower, the better
13. Capital asset expenditure requirements The lower, the better
The lower, the better
14. Customer & supplier diversification
The greater, the better
15. Level of management experience
The greater, the better