How to Value a Private Company Part 2 - Case Study Examples

How do you value a private company? What valuation approach is relevant for small business valuation with no market comps available? How do you normalize EBITDA for valuation purposes?

In this video I walk through four different valuation exercises looking at growth and underperformance situations and how that influences the value of a company. By anticipating the value drivers and value limiters from a buyer's perspective, you can anticipate the level of market demand for your business which translates to a higher or lower multiple range. Valuation is more art than science so please note that these factors may not apply to all companies so please apply this methodology with caution and seek professional help before selling your business. This is the approach we use at Roblee Capital to assist business owners in determining their business value prior to selling their business.

The four companies analyzed in this video are:

1) Valuing a HVAC Company with $900K in EBITDA
2) Valuing a Metal Fabrication Business with $750K in EBITDA
3) Valuing a Home Renovation Service Provider with $3.7MM in EBITDA
4) Valuing a Printing Business with $500K in EBITDA

Click The Link Below To Purchase the Letter of Intent (LOI) Template For Asset-Based Acquisitions on the FinanceKid website. Thank you for your support!

If you have any other questions, please comment below. If you enjoyed the video and found it helpful, please like and subscribe to FinanceKid for more videos soon! If you want to reach out, contact me at;

If you are looking to sell your business and would like to learn more about Roblee Capital, please reach out to me for an introductory call. You can contact me through email or through my LinkedIn at;

Roblee Capital is a Toronto-based M&A Investment Bank focused on serving companies with revenues between $1MM to $100MM primarily offering sell and buy-side M&A services. We work with Canadian-based business owners looking to sell their lower mid-market business. If you are a Canadian business owner looking to sell or buy, please reach out so we can connect at the link below:

[SuperHacker]

This was really well written, narrated and presented. Thank you for this, it’s been extremely helpful.

[moshawqy]

Best in class, don’t think I watched another video more informative and detailed as the 2 parts here.

[samueljoseph]

Amazing video! Very hard to find actualy case studies on youtube for small business valautions. Thanks for sharing this!

[ricecube]

Thank you I’ll have to listen to this again and take notes

[illamaxilla]

Let me know when you start your school on M&A. You are amazing for these gems.

[himansupatel]

Great info. Thank you. Where do I get multiplier for Australian businesses

[godlyconversations]

Great video. Very clear explanations and easy to understand

[scotolivera]

Wow, Amount of information just incredible thanks

[skrapsaker]

Great video! High quality and very pedagogical! Thank you!🙏

[yoloyolo]

How would you get information such as the average EBITDA multiple by company size?

[johnpitso]

Great information. I would really appreciate learning how you approach calculating the Required NWC (Target) value / (Target Working Capital). Thank you very much for the insight.

[hiteshkumarpatel]

Thank you. Very informative video. I got question What taxes are we going to count in EBITDA ? Is it property tax, Payroll Tax & sales Tax in case of Retail (C Store)? Because Personal income tax goes to owners 1040 so it is already not in company P&L.

[DeargOBartuin-hi]

I notice in all of your calculations the buyer expects the net debt to be cleared as part of the buy out. Would this be true for mortgages where the business is so far repaying on time and able to afford and if not how would you adjust for such a liability on the balance sheet or would you for sure build the outstanding mortgage value into the valuation and ensure it is paid once the sale is confirmed? Thanks

[dragonman]

Can you please let me know how you come up with the NWC Target?

[HarshdeepSingh-zx]

Great content, Thanks! I wanted to ask if we are doing these deals and on Cash & Debt Free basis, how about to calculate our purchase price, we don't include Cash and Long-term debt in our calculation and purchase price then is Adjusted EBITDA multiple (Enterprise Value) + Target NWC adjustment? Assuming seller pays it's debt on closing and cashes out as well.

[Clem_dow]

Hi thanks for these videos, they're great!! At 22:35, you inform us how the factors are used to refine the range. how do you arrive at 4 to 4.5 though. What's the math behind that range?

[rohits]

Excellent content, Thanks ! Could you please explain if the useful life of the Fixed Asset base (like PP&E), like capital assets replacement history also needs to be evaluated as part of the BS analysis and HOW. What if the buyer gets to know at the time of acquisition that the target's fixed assets are already depreciated say 70-75% on the books and replacement would be required in the near future, how would you evaluate such situation from the Purchase price adjustment and Valuation perspective (EVtoEquity bridge). Thanks in advance.

[Clem_dow]

Why arent long term assets being caputred apart of the balance sheet value like net working capital is?

[Clem_dow]

How do yoou determine the required net working capital?

[scottbreidigan]

Near the 24 minute mark, you add on the total balance sheet value to the purchase price. I thought it would just be the excess NWC + EV = price. Why did you add the total balance sheet here?