What is Market Value? (1)(2)(3)
Market value for private established companies is typically the product of adjusted EBITDA (which includes “private company” and other non-recurring expenses) and the EBITDA specific market multiplier (influenced by specific company and industry factors).
(EBITDA + Private Co Add Backs) x (Your Specific Market Multiple) = Market Enterprise Value
Market Enterprise Value – Long Term Debt (to be repaid) + $ on balance sheet = Market Equity Value
Our work can positively increase both EBITDA and the multiple.
(1) The general rule for market value for most “going concern”, middle market companies (except those in specific industries like real estate, bio tech, the internet space, etc.) irrespective of whether you sell assets or stock.
(2) Enterprise value is a measure of the market value of the entire company–it includes all assets (A/R, inventory, fixed assets, good will, etc.) and the assumption of most liabilities (except long term debt).
(3) Market equity value less taxes and transaction expenses equals take home cash