Hang on let me write this down “businesses are only worth what people are willing to pay for…”.
j/k. The margin is a WAG. 30 - 40% is probably more realistic. In any case I’m pushing for the sale so he can give me all his money to invest.
2-3x sales, brah? Is this mom-and-poop high-tech SaaS play with skyrocketing growth profile?
Hey Turd, I have seen multiples by deal size by Pitch Book I think. But it really is true that the valuation is meaningless. Your firm would be larger than I have experience with, but there are high friction with business sales. They fall through all the time and the multiples have a wide range.
you should really watch shark tank or the profit. shark tank is more condensed and focuses mostly on great cos. you have 5 really rich people, each with a net worth ranging from 50m to 1 bil, competing with each other to buy a bizness. you get the numbers straight up from the owners, and an implied multiple from an offer. always revenue, sometimes gross profit, sometimes net profit, sometimes free cash flow. it varies. an unprofitable crap bizness with low sales usually wont get an offer.
the profit is more detailed on a specific co and is typically ran crappily. this is more about how to turn around your co. lemonis who has a net worth of about 1 bil comes in and fixes it up by making it more efficient or cross selling to other cos he owns or has connections with thus increasing sales and improving the margin. he estimates how much the sales will improve. estimates what the margin should be, and if his predictions are right, the offer is typically a low multiple of those predictions.
those shows are trash and don’t apply here. We’re not selling snuggies. This is a high human capital business in the medical industry that’s been around for 20 years.
lol shark tank better than pe/vc in terms of returns and how fast they improve businesses even the ones that dont get deals. on your question, high human capital business usually means really shit multiple. like 3x earnings. 1x rev. and usually with a contract to keep person in until money is recovered, or the person is only selling a portion with a successor being groomed.
how come you dont like the shows though? have you ever watched it?
also basically every shark tank deal falls apart so you’re not even watching anything happening. they’re like “i’ll give you a million” and when no hype instigated sales spike occurs they’re like “no deal!”. being on that show is simply a free call option for the sharks.
Source?
the quality has improved over the seasons.
https://www.businessinsider.com/what-happens-after-closing-shark-tank-deal-2015-10
Ultimately, said Cuban’s fellow Shark Daymond John, about 80% of season seven’s deals made on camera closed, which is up from about 60% to 70% of past seasons.
FORBES found that 319 businesses accepted deals on-air in the first seven seasons of Shark Tank. We spoke to 237 of those business owners and discovered 73% did not get the exact deal they made on TV. But tweaked terms or dead deals don’t necessarily spell doom for a business; for many contestants we spoke to, the publicity of appearing on the show ended up being worth more than the deal.
About 43% of the people we spoke with said their deals didn’t come to fruition after the show. They attributed this to sharks pulling out of the agreement or changing the terms to ones that didn’t work for them. Others canceled deals after getting term sheets that included unappealing clauses. And occasionally the deals ended amicably.
Another 30% of the people FORBES interviewed said the equity and investment amount offered on-air changed after taping – but they chose to take the deal anyway. They said that the changes often occur during negotiations or in due diligence, an investigation into a person or business before signing a contract.
For all the seasons. the best closer is: Mark Cuban closes on 87.5%. Daymond John 59.3%. Kevin O Leary 57.1%.
Fool, Apprentice or hacksaw. Although, I think it was a bit Sad how Arnold tried to host it and unsuccessfully upstage Trump. Arnold, why you stoop to this level.
i exxagerated a bit but as of 2015, 43% of shark tank deals fell through and 30% of shark tank deals likely went through at lower prices while only 27% went through as presented on TV.
i have one friend and one acquaintance who appeared on dragon’s den canada; both got deals but both fell through.
how can anyone downvote MLA?