Who is thinking about the “multiple”?
Shaun Orpen
Partnering with clients to reduce the time to market, risk and cost of developing software
Whilst there are a whole range of detailed calculations and views on how to value a business – in my experience, value is often expressed as a “multiple” of revenue/profit. Particularly In the world of technology companies, there is a lot of talk about the typical range of “multiples” for a particular sector of the market. What has been interesting is that in all my recent conversations with CEO’s they can point to individuals around their table who are responsible for driving the other part of the equation (ie. revenue and or profit). Seldom however is anyone responsible for planning on how to maximise the ‘multiple’. Given this has such a huge effect on the end valuation shouldn’t more time be devoted around the Leadership team table to thinking about and planning the business to optimise the multiple in an exit event?
CEO at Plainsight Technologies
8 年IMHO multiples are a comparison/rationalization of an agreed price. early stage company valuations are really "whatever the market will bear" and are based on comparable exits, appetite, negotiation, X factor. Optimizing a company for a "multiple" from an operational perspective is the wrong focus. Focus on users, growth, innovation, talent, brand, revenue, and whatever other metrics or KPIs you and your investors think are strategic to the business. Become valuable and the multiple will solve itself.
Shopkeeper.
8 年"Shareholder Value" - quite simply the only universal business goal. You are right - it is talked about far too rarely, and not openly.