Valuation

Valuing private businesses often involves using multiples of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). For small businesses, the EBITDA multiple typically ranges from 2 to 4. This means if a small business has an EBITDA of $1 million, its valuation could be between $2 million and $4 million. Mid-market companies usually have higher EBITDA multiples, ranging from 6 to 7. For example, if a mid-market company has an EBITDA of $10 million, its valuation could be between $60 million and $70 million. When a company goes public through an IPO (Initial Public Offering), its valuation can see a significant jump, often increasing from 7x EBITDA as a private entity to 10x or more post-IPO, due to factors like increased liquidity, greater access to capital, and enhanced visibility.