My first column for The Globe & Mail came out today and it talks about the kind of multiple business owners are getting for their company.

The general consensus I’m hearing from deal makers is that multiples are down at least one (if not two) turns to something around four times pre tax profit. What’s worse, a lot of business owners are being forced to finance some of the sale themselves.

The problem is that, since the financial crisis of 2008, buyers can’t get bank debt so they need to put more of their own cash into a deal. The more cash they put up, the lower their potential return on equity and hence the lower the multiple they’re willing to pay.

In the article, I quote an interview I did with private equity deal maker George Rossolatos.  His advice for increasing your multiple is to simply increase the size of your EBITDA. Rossolatos argues that buyers are willing to pay a higher multiple for a big company’s EBITDA because the deal costs are spread over a larger deal and the chances that the business is super-dependent on the owner are lower.

Here’s a two minute video of me being interviewed about how to increase your multiple:

Would you sell for four times if someone offered it to you tomorrow?

If not, what are you doing to increase your multiple?

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