Question
I'm seeing in differnt articles on the Internet that my earnings multiple could be anywhere from 3-9 times revenue. How can I get a better defined number? For example, if my business was making 1 million in revenue and I sold it off at a 5x multiple it would be worth 5 million (excluding discounts). I just don't know what multiplier to use.
Answer
It depends on what vertical you are in. There are pointers available by industry. You can either define that future value based on internal data or external data. Either way, it depends on what you think you will be worth - financial 'thumb suck' models will only get you so far...
