WHAT IS YOUR REQUIRED IRR?
A question to both searchers and SF investors. I work with 30% as the required rate of return (looking for around 5 MIL USD targets).
This is my starting point for high-level valuation. From that and expected cashflows, I arrive at an initial price multiple to be paid for the business which I then adjust slightly with around 7 pros/cons criterions to arrive at my sweet spot multiple. Comparing that with the initial asking price I then see if there is potential to overcome any pricing gap down the road or not.