The Power of Acquisitions
Is it possible to increase the value of a business worth $3 million by 50% or $1.5 million by making a $500,000 acquisition? Here’s a possible scenario: A landscape services company with $750,000 in EBITDA might be worth, in some circumstances, $3,000,000 (if it was valued based on a multiple of four). A smaller landscape services company with $250,000 in EBITDA might only be worth $500,000 (based on a multiple of two). If the larger company is able to acquire the smaller company for $500,000, the starting point for the combined company’s EBITDA would be $1,000,000. If the larger combined … Read more