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Mergers and Acquisitions Strategy for Consolidations: Roll Up, Roll Out and Innovate for Superior Growth and Returns by Norman W. Hoffmann

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Chapter 5Rollup Valuation

How much to do the deal?

Exhausted operator: “Just make me an offer.”

Wild-eyed dreamer: “Enough to make me richer than God.”

Small business broker: “Two to four times the sum of EBITDA and the owner’s draws.”

Investment banker: “Good question, and there’s no simple answer. To establish a base expectation, we’ll perform exhaustive discounted cash flow analyses, employing Monte Carlo iterations on a multitude of projections supported by your worst-case/best-case/most-probable forecasts. We’ll assess those results in juxtaposition with all relevant comparative transactions completed in the last five years, taking into consideration existing market conditions and the inherent desirability and growth prospects of the specific ...

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