How does your valuation algorithm work?

Our valuation algorithm is our proprietary estimate of an indicative value, based on taking known financials and arriving at a projected value based on an assumed growth rate and equity / debt multiples. 

The EV/EBITDA multiple is determined by our platform, which uses a continuously back-tested algorithm (e.g. compares results with prior deals data). This is not done by our analysts.

The platform starts with a historical median multiple for medium-sized private businesses (>10m EBITDA). The multiple is then adjusted for:

• Sector (e.g. Software companies tend to have a higher multiple than Industrial companies)
• Size (large companies tend to have a higher multiple than smaller ones)
• Historical performance and business profile (derived from investment criteria on our platform)
• Outlier cap (adjusting for values that are uncommonly high for a given sector)

The primary goal of our valuations is to provide a ballpark estimate of deal size. Like this, it is a helpful input to judge whether a company is within the sweet spot of an investor or advisor. Of course, it only provides a directional indication of the true company value.

You can assess the assumptions applied at each step of the valuation estimate by clicking on the arrow on the right of each estimate.

Need more help? Reach out to us via Support@Gain.pro or chat with us via the blue button below.