Thi-Thi For Sale

[JRSC00LUDE]

Well whatever the valuation I hope they do well with the sale. Great people, I have visited 100% of the time I go to Calgary and even after long absences they remember who you are. Sad to see it go, whenever that day is. Hope I get to go again!

[suntan]

1X earnings would be fair.

[killramos]

I wasn’t criticizing the business in any way. Love Thi Thi, comments on value expectations in a sale are completely different than comments on the business or owners.

If that wasn’t clear.

[2020]

Kinda surprised it wasn’t listed for $888,888.88

[riander5]

Beyond group buy?

[tirebob]

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Asking price north of 2x annual revenue for a small business.

glwt

I have heard this same general guideline for small businesses many times. I think it obviously will vary business to business and the profitability factor. I certainly think there would need to be a competition clause for sure or a popular person in the community could just turn around and open a new location and steal all the clients back.

Personally I would be happy if I could get 3.8mil for my company using the same valuation formula. I will even let you hire me back 6 months a year and keep my name attached for marketing purposes! Any takers??

[ExtraSlow]

I'm actually looking at an opportunity buy a business right now that has some pretty decent current revenue. Well, not my money, but I'm on the team doing the evaluation. Plan is to keep the current owner/boss on a consulting contract for at least 2 years to prevent him opening a competitor.
Not subs or tires though, so not sure if the multiples apply. They do have a facility in California, so maybe I'll get work trips there in the future. A guy can dream.

[killramos]

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I have heard this same general guideline for small businesses many times. I think it obviously will vary business to business and the profitability factor. I certainly think there would need to be a competition clause for sure or a popular person in the community could just turn around and open a new location and steal all the clients back.

Personally I would be happy if I could get 3.8mil for my company using the same valuation formula. I will even let you hire me back 6 months a year and keep my name attached for marketing purposes! Any takers??

I do not think 2x Annual Revenue is a good valuation metric for a small business, that seems wildly optimistic.

Unless for some reason you have line of sight to that revenue growing substantially in future years.

*Not financial Advise

[tirebob]

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I do not think 2x Annual Revenue is a good valuation metric for a small business, that seems wildly optimistic.

Unless for some reason you have line of sight to that revenue growing substantially in future years.

*Not financial Advise

Yeah I agree... I mean just as a basic quick calculate number sure that can work, but in the end anybody buying/selling an existing "viable" business should be doing a proper assessment before committing to anything.

[bjstare]

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I do not think 2x Annual Revenue is a good valuation metric for a small business, that seems wildly optimistic.

Unless for some reason you have line of sight to that revenue growing substantially in future years.

*Not financial Advise

"Small business" could mean a shitload of different things. A landscaping business vs. tire & wheel vs. food/restaurant vs. construction (etc., etc.) would all have different unique levers on their valuation. Across all the different types of small business, 2x revenue valuation could very well be the consolidated average, despite there being a wide disparity between individual data points (i.e., business types).

[riander5]

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I do not think 2x Annual Revenue is a good valuation metric for a small business, that seems wildly optimistic.

Unless for some reason you have line of sight to that revenue growing substantially in future years.

*Not financial Advise

Is 'Revenue' a good metric for valuing anything?

Maybe that's how WeWork came up with a $47 bil valuation.

If revenue somehow is actually a great valuation method for anything plz don't roast me @suntan

[suntan]

Revenue is a terrible metric for valuation esp for service businesses.

[max_boost]

til

Most companies sell for 2-6 times SDE. If you look at all business sales under $1 million for the last 10 years, the average multiple of SDE is 2.2 times but sometimes the multiple is not as high as the seller wants or thinks it should be.

[killramos]

Earnings =/= Revenue

*Not an Accountant

[Buster]

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til

this is about right.

[Buster]

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I do not think 2x Annual Revenue is a good valuation metric for a small business, that seems wildly optimistic.

Unless for some reason you have line of sight to that revenue growing substantially in future years.

*Not financial Advise

If the seller wants to get an elevated multiple based on potential (which they conveniently have not captured themselves), then the extra turns on cash flow should be performance based. For a business that has relatively low barriers to entry, an easily replaceable product, and not a ton of brand equity, then a 2x cash flow multiple is pretty generous considering that you are basically buying yourself a job.

[Euro_Trash]

Had lunch here today, 10/10

[ThePenIsMightier]

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If the seller wants to get an elevated multiple based on potential (which they conveniently have not captured themselves), then the extra turns on cash flow should be performance based. For a business that has relatively low barriers to entry, an easily replaceable product, and not a ton of brand equity, then a 2x cash flow multiple is pretty generous considering that you are basically buying yourself a job.

iIRC, I think Colt Engineering, CH2M-Hill and Jacobs were all purchased for very near 10x EBITDA.
Therefore, that's the multiplier for O&G EPC.
How this relates to a small restaurant = (bugger all)^0.6

[Buster]

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iIRC, I think Colt Engineering, CH2M-Hill and Jacobs were all purchased for very near 10x EBITDA.
Therefore, that's the multiplier for O&G EPC.
How this relates to a small restaurant = (bugger all)^0.6

And people buy Tesla stock at 102x.

[riander5]

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iIRC, I think Colt Engineering, CH2M-Hill and Jacobs were all purchased for very near 10x EBITDA.
Therefore, that's the multiplier for O&G EPC.
How this relates to a small restaurant = (bugger all)^0.6

Wow, thats a very standard valuation for midstream companies. Surprised EPC's that could lose most of their business at a moments notice could fetch that.