A common owner question when contemplating eventual exit is, “What will my training company be worth?” Industry sales multiples provide general benchmarks. However, actual bids still vary widely due to buyer motives.
The Role of Buyer Motives
All prospective buyers aim to grow through acquisitions. But specific situations and needs differ, driving the priority they assign to a purchase. Common buyer motives include:
Geographic expansion
Adding complementary services
Gaining customers and talent
Obtaining key technology or IP
Removing a competitor
A buyer’s overriding one or two motives steer the multiple they ultimately offer. This translates into a wide bid range even for similar training firms.
Real World Examples
Assume your adjusted EBITDA is $3 million. In a competitive sale process, these sample offers could emerge:
Buyer A - $15 million (5x EBITDA)
Buyer B - $30 million (10x EBITDA)
Buyer C - No offer
Rather than flaws in math skills, the divergence ties to motivations and value assigned to strategic goals.
Focus on What You Control
Don’t get lost trying to predict buyer thinking. Instead, maximize credibility through preparation. Then let suitors reveal their perceived worth through bids.
Experienced advisors discretely manage outreach and negotiation to allow motive nuances to surface. Place yourself in the best position, then allow the market to speak.