Valuers typically provide a range to determine the multiple and this range is usually observed from trading multiples of listed companies or sale transactions.
Where a business sits within the multiple range depends upon a number of qualitative issues that go right to the heart of value. InterFinancial’s valuation tool is primarily aimed at industrial companies that are in growth or mature phase.
While there a number of methods of valuing a business or a company the two main methods for valuing a business as a going concern are:

• comparative market multiples and
• discounted cash flow

We use a comparative market multiple valuation methodology, Capitalisation of Maintainable Earnings, as our primary methodology.

The Capitalisation of Earnings Methodology requires an assessment of earnings of a company/business and selection of an appropriate capitalisation rate, or earnings multiple – generally an Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA) multiple.

Multiples are either observable, from examination of trading multiples of listed companies based upon current share prices or transaction multiples from the sale of similar businesses.

In determining the multiple to apply to your business InterFinancial will use both observation of relevant trading multiples and a building block approach to determine an appropriate multiple.