Tag: #how to value equity

Valuing cybersecurity service providers presents unique challenges and opportunities. As demand for digital security rises, private equity firms, investors, and business owners are paying closer attention to how these companies generate and sustain enterprise value. This article examines the key factors that influence the valuation of cybersecurity service firms, with a particular focus on revenue […]

Managed Service Providers (MSPs) and IT services firms are increasingly sought after by investors and strategic buyers. However, valuing these businesses requires a deep understanding of their operational models, recurring revenue profiles, and customer retention metrics. This article explores the most critical drivers of value for MSPs, including Monthly Recurring Revenue (MRR) composition, logo churn, […]

Valuing a digital marketing agency requires a nuanced approach. Unlike traditional businesses with tangible assets or inventory, digital agencies operate in a service-based, project-centric environment with unique financial structures. Their value often hinges on intellectual capital, client relationships, delivery efficiency, and recurring revenue patterns. This article explores the primary valuation factors that influence the worth […]

Fintech and payments companies have become a vital segment of the modern economy, enabling seamless transactions, real-time settlements, and new digital frontiers for financial services. Valuing these businesses, however, presents unique complexities due to platform economies, variable compliance costs, rapid transaction volume growth, and evolving regulatory landscapes. Success in fintech depends on more than just […]

Understanding the value of an e-commerce business involves more than applying a basic revenue multiple. As these businesses grow in complexity, so too must the valuation methodologies used to assess them. This article explores the critical financial and operational drivers that influence e-commerce valuations, including channel mix, customer acquisition costs, SKU concentration, return rates, and […]

Valuing Software-as-a-Service (SaaS) companies requires a nuanced understanding of recurring revenue dynamics, customer retention patterns, and capital deployment efficiency. As software businesses increasingly adopt subscription-based models, traditional valuation approaches must be adapted to account for metrics such as Annual Recurring Revenue (ARR), Monthly Recurring Revenue (MRR), Net Revenue Retention (NRR), gross margins, and customer acquisition […]

The Discount for Lack of Marketability (DLOM) is a critical adjustment in business valuation that reflects the reduced liquidity of privately held shares compared to publicly traded securities. This concept is especially important when valuing minority interests in closely held businesses, where converting ownership into cash is not readily possible. Accurately estimating the DLOM can […]

Working capital is a critical yet often misunderstood component of business sale transactions. It plays a central role in determining the true price a buyer will pay and a seller will ultimately receive. This article explores how working capital requirements affect business valuations and deal structures. We will examine how target working capital is calculated, […]

Executive Summary: Understanding and applying industry-specific valuation multiples is fundamental to accurately assessing the value of a small business. While metrics like EBITDA and Seller’s Discretionary Earnings (SDE) are commonly used in private company valuations, the appropriate multiple can vary significantly depending on the industry. In this article, we explain how these multiples are derived, […]