1.5 or 2x revenue has been around for as long as I can remember for any company. But it is totally bogus. I suppose if you have net earnings of 50% then 1.5 x revenue would be EBIDTA x 3. But how many businesses have a net of 50%? Hopefully all of them but in reality most have far less.
From: Josh Luthman Sent: Wednesday, April 13, 2016 9:32 AM To: [email protected] Subject: Re: [AFMUG] shareholder value Everyone's always said 1.5x annual revenue around here. I don't know how or why that started, but that answers your question. Josh Luthman Office: 937-552-2340 Direct: 937-552-2343 1100 Wayne St Suite 1337 Troy, OH 45373 On Wed, Apr 13, 2016 at 11:23 AM, Travis Johnson <[email protected]> wrote: Hi, I'm not sure where you got the 1.5 times revenue number. Every single company I have invested or purchased is based on their EBIDTA number, not revenue. Generally I am around the 3x annual EBIDTA. Travis On 4/13/2016 9:14 AM, CBB - Jay Fuller wrote: � Good morning - � Today we received notice at least one of our shareholders wishes to share his stock.�� We have another shareholder who is the widow of one of our founding members who also should probably be considering selling - although she is not really thinking about it.� We do not know any of her relatives (nephew?) who would likely be the heir to her stock.� Her age is currently 81 I believe. � I know the "ongoing" value for a company is generally 1.5 times annual revenue, but the true value of what a company is worth is what someone is actually willing to pay for the stock. � Per our bylaws, the company has 30 days to make an offer before the stockholder hits the general market. � What advice can you give as to what kind of offer the company should give? � The stockholder likely does not know what the "market rate" is and very likely the market rate is not the same here in the deep south. � I am also curious as to what your thoughts may be on how the stockholder may try to sell his stock on the open market.� I feel sure it would not consist of a classified ad in the local paper. :) � Thanks in advance. � �
