ADDING TO OR SUBTRACTING FROM INDUSTRY AVERAGE MULTIPLE

Does the below seem reasonable?

Currently looking at a Commercial GC/CM opportunity with a 3-year CAGR of -14.5% (YoY Revenue Decline of[redacted]% in 2020 and[redacted]% in[redacted]a decent profit margin for the industry and a healthy pipeline (approx. a 35% - 50% increase from 2020 revenue)

The management team is in place/will convey with sale. The owner "seems" to have done a good job with transitioning to working on the business as opposed to in the business.

The industry multiple average is ~3.5 EBITDA.

Target's 2020 EBITDA is $1M.

I am kind of sticking my finger up into the wind with this but am thinking a 2.75 x EBITDA is a more appropriate multiple due to the multiple yearly revenue decline.

Am I way off? What would you suggest adding to or subtracting from the industry average of 3.5?



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