Using BVR Valuation Multiples for Negotiation

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by a searcher from University of Maryland - Robert H. Smith School of Business
in New York, NY, USA

4yrs ago

Using BVR Valuation Multiples for Negotiation

When looking at the BVR for specific industries, what makes a business fit into the different quartiles to price negotiation? This is for all industries / PE as well - not just for SMB Acquisition so it is hard to set... I would say:

>$500K EBITDA ~ 25%

$500K-$2M EBITDA - 50%

2-5M - 75%

5M+ ...

Thoughts?

1 Like

138 Views

reply by an intermediary 4yrs ago
from The University of Chicago in Chicago, IL, USA

I am not sure I understand your question. But few comments:
BVR is one of the best. However, there is a wide range for each type of business.
Over-reliance on multiples risks loosing a good opportunty or over-paying. Two businesses (same product, same size, same profit, across from each other, no concentration, etc) can have materially different value. Seasoned buyers run pro-forma and do sensitivity analysis, and use multiples as a sanity check.