Business Valuation & lending question

Discussion in 'Business Accounting, Tax & Legal' started by Codie, 5th Aug, 2021.

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  1. Codie

    Codie Well-Known Member

    Joined:
    6th Mar, 2018
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    Brisbane
    Hi All,

    Looking at a business right now and have signed an NDA as of today. Going through all figures etc and wanted to get some opinions on valuation multiple.

    Owner wants around 1.4m
    Business is doing 2.5m in rev per annum
    2019-2020 net EBITA $360k
    2020-2021 EBITA $405k

    Husband, wife, and child all drawing income with only him working in the business. Combined incomes of around $246,000 + around $55k in super contributions. They also put a couple vehicles through the business.

    I could save $150k up front pretty easily.

    Business is established, scalable, and I work as a supplier in the industry so know the customers, clients, and market well.

    Based off 2020-2021 FY it’s a multiple of x3.5. Cutting some costs and paying myself $150k a year it would pay itself off in 3. Or draw dividends and pay it longer. Is this multiple quite normal for a business of this size??

    Also, if looking to finance, financing 1.4m.. What are banks looking for in business? Is there a typical LVR they are comfortable with?
     
    Codie, 5th Aug, 2021
    #1
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