VALUATION OF HYBRID SOFTWARE/ PHYSICAL LOCATION BUSINESS

I am looking fairly seriously at an acquisition of what I'd call a hybrid or software enabled business. The company has an EBTIDA has an adjusted EBITDA in the $1-2 million range (when I add in reasonably salaries for key employees who today aren't being paid). Revenue model is subscription. Client pay month or annually to access the service.

The company provides a service to home based business owners that is available online and partially delivered through physical locations by those who need them. It's akin to a multi-site tax service that has software for where you can create your return and a physical locations where you meet with a tax advisor and sign your return (at least that's the best thing I've been able to compare it to).

The growth of the company today is reliant on having physical locations and software - not one or the other. Thus, I don't think I can use a pure play software or SaaS business or an offline service center / consulting model to baseline it. Competitors have no owned locations (they scale through partners who own locations, though quality, speed, and client experience are inferior). As a result, competition could see software or SaaS multiples IMHO.

I'd like to gain perspectives from the community with experience valuing similar hybrid / tech enabled businesses, how you might frame your approach (not looking for a multiple per-say, just trying to gain insight on how I might think about this as I move toward writing an offer / LOI).

**I fully realize that EBITDA multiple may not be ideal. May very well be that a weighted average approach is better suited.



share: