This is the first episode in our new series, The Private Company Valuation Forum.
The aim of The Private Company Valuation Forum is to shed light on this important topic, offering better insight into how to value private businesses as the world opens up post-Covid.
Hardman & Co has seen a rising interest in valuation work and we aim to provide investors and entrepreneurs alike with the theoretical backbone to achieve accurate valuations. We produce bespoke work for a range of clients, from business valuations to commercial due diligence reports. By combining the skills of our analysts with the experience of our team of capital markets professionals and their contacts, you can be assured of impartial advice and the benefit of our established relationships.
In this discussion, host Richard Angus kicks off with thoughts about the disconnect between what returns investors expect versus what companies can realistically deliver in this environment.
Doug Lawson of MarktoMarket then presents on quarterly private company deal data, starting with a look at the decline in EBITDA multiples paid in deal transactions over the last five years for the All-Cap Sub £250m index right through to the nano index. Doug also discusses the concept of “flight to quality”, as investors show preference for larger, more stable companies. He touches on the effect of private equity influences on deal prices in relation to their access to reasonably priced debt, and reflects on how pre-profit companies can approach valuation (possibly a DCF) and benchmarking early stage companies.
Finally, we are joined by guest speaker Seb Cartwright of Saffery. He explains how valuations differ within his client base (entrepreneurs/owners) where accurate information is hard to come by. Benchmarking is key in this scenario, typically using a proxy for EBITDA multiple to find Enterprise Value, and making adjustments from there. Seb discusses the important role that due diligence plays in getting deal transactions “over the line” and the misconception business owners have about their ability to influence the final valuation multiple. Seb goes on to talk about how entrepreneurs need to focus on top-line revenue and growth rather than making business decisions based on benchmarking multiple trends (eg. tech-enabled vs tech companies).
Watch the video now to find out more about private company valuations, and get in touch with Richard if you are interested in finding out more about our corporate valuation work.
