Valuations are part art and part science. Even the most complex calculations and models can merely estimate the value of an entity - true value is only worth what a buyer or investor is willing to pay. Having said that, Syft's Valuation feature is a fantastic starting point for providing you with an indicative value of your entity to support investor, partner and acquisition conversations.

Our Valuation methodologies are a collection of industry standards that result in sound and reasonable estimations. In this post, we explain an important component of three valuation approaches, the multiple. The multiple is a key component of the revenue multiple, profit multiple and EBITDA multiple valuation methodologies. Read more about how each multiple is calculated below.

The revenue multiple approach uses an entity's previous 12 months revenue multiplied by a revenue multiple to estimate the value of the entity. For example, if your revenue is $10,000 in the previous 12 months and your entity revenue multiple is 3, the estimated value of your entity is $30,000.

The revenue multiple is based on the following inputs:

You can usually expect a revenue multiple between 1 and 3 for most entities. To arrive at a final revenue multiple, we use the revenue multiple applicable to your country and industry and then multiply that by your revenue growth rate. For example, if your country and industry multiple is 2 and your revenue growth rate is 10%, your final multiple is 2.1 (2 * (1 + 10%)).

The revenue multiple applicable to your country and industry is based on analysis conducted by our corporate finance advisory team and incorporates actual market transactions. You can adjust our suggested multiple by clicking "Adjust" on the Valuation Dashboard at anytime.

The profit multiple approach uses an entity's previous 12 months profit multiplied by a profit multiple to estimate the value of the entity. For example, if your profit is $10,000 in the previous 12 months and your entity profit multiple is 6, the estimated value of your entity is $60,000.

The profit multiple is based on the following inputs:

You can usually expect a profit multiple between 4 and 7 for most entities. To arrive at a final profit multiple, we use the profit multiple applicable to your country and industry and then multiply that by your profit growth rate. For example, if your country and industry multiple is 4 and your profit growth rate is 20%, your final multiple is 4.8 (4 * (1 + 20%)).

The profit multiple applicable to your country and industry is based on analysis conducted by our corporate finance advisory team and incorporates actual market transactions. You can adjust our suggested multiple by clicking "Adjust" on the Valuation Dashboard at anytime.

The EBITDA multiple approach uses an entity's previous 12 months EBITDA multiplied by a EBITDA multiple to estimate the value of the entity. For example, if your EBITDA is $15,000 in the previous 12 months and your entity EBITDA multiple is 4, the estimated value of your entity is $60,000.

The EBITDA multiple is based on the following inputs:

You can usually expect a EBITDA multiple between 3 and 5 for most entities. To arrive at a final EBITDA multiple, we use the EBITDA multiple applicable to your country and industry and then multiply that by your EBITDA growth rate. For example, if your country and industry multiple is 3 and your EBITDA growth rate is 30%, your final multiple is 3.9 (3 * (1 + 30%)).

The EBITDA multiple applicable to your country and industry is based on analysis conducted by our corporate finance advisory team and incorporates actual market transactions. You can adjust our suggested multiple by clicking "Adjust" on the Valuation Dashboard at anytime.