Online company valuation feedback
February 19, 2021
by a searcher from Northwestern University - Kellogg School of Management in New York, NY, USA
I am evaluating a company that has the following numbers:
###-###-#### Revenue $5.6M, EBITDA: $500K
2019: Revenue: $6.6M EBITDA $550K
2020: Revenue $11.1M EBITDA $2.1M
2021 Forecast: Revenue $13M and EBITDA $2.8M
Its a company in the online curriculum space that likely got a major "covid boost" with kids studying at home. Typical multiples in the curriculum space are 5-6x.
Lenders: How would you go about providing leverage for the company? Searchers: Would you value the company off of 2020 or take an average off of the last three years?
from Indiana University of Pennsylvania in Pittsburgh, PA, USA
Most often I see banks looking at the 3 year average but can provide additional weight to most recent year with detailed explanation on why that would be more predictive of future revenues/EBITDA than the average. In this case would want as much supporting information on assurance on enrollment for 2021, likelihood for similar enrollment in post Pandemic world, etc. (this will be similar information that a business valuation firm would need in their analysis which will often be needed in lending situation). Other items to focus on:
- Motivation of sellers
-Industry experience of buyers
- Overall Equity Injection
- Seller Note(s) to possibly bridge the gap in historical valuation vs. most recent year/projections
from Carleton College in Leesburg, VA, USA