Valuation Concepts Discussion on the Buy and Build Podcast
Earlier this year, I had the opportunity to speak to my friends Paul Quirk and David Nefs, founders of the Buy and Build podcast, on various valuation concepts. Paul and David each run a search fund, which is a niche of the private investment management sector. Search funds are investment vehicles formed by individuals deploying private capital to identify, acquire, and manage small and medium businesses (SMBs) with established operations. In 2021, David closed on his acquisition of The Daily Sparkle, a UK-based newspaper for the elderly and people living with dementia, and has since decided to focus on those endeavors full-time (CONGRATS!!!). Paul carries the torch forward with the podcast as he moves closer to closing his own acquisition. If you have any interest at all in SMBs (as an investor, consultant, or otherwise) particularly in the UK and European markets, this podcast is a goldmine of information. Check it out!!
In Episode 17, we discuss concepts, including:
- EBITDA and its importance in assessing company valuations
- How to think about industry average multiples
- Typical approaches to valuing smaller companies
- Using private company transaction databases
- Ongoing working capital reinvestment and its impact on valuation
- Capital expenditures and strategies for considering within financial models and valuation multiples
- Discount rates and assessing key investment risks
- Observations of transaction deal structuring in the middle market vs. SMB deals
- Theoretical valuation approaches vs. real-world deals
It was great to chat with these guys. I hope you’ll take some time to check out the Buy and Build podcast!
