M&A Transaction Pricing Trends: Q1 2018

Pricing is the most critical component of all M&A transactions. With accounts receivable management (ARM) companies ranging from those generating less than $2 million in annual revenues, to “platform” companies generating many tens of millions of dollars in revenue, pricing is typically derived by applying a multiple of the selling company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) which typically needs to be normalized to account of any excess or one-time operating expenses to reflect the company’s true operating income. As such, pricing is a difficult topic for valuation experts to discuss in the aggregate as there are always outliers.

Mike Ginsberg offers his insights regarding M&A pricing trends as of Q1 2018.