Archive for: August 12, 2015

We are not big on valuing companies based on “multiples” – be it a multiple of this year’s or last year’s revenue, EBITDA, net income, book value, or any other lone financial metric. The drivers of value are much more complicated than can be reflected by financial multiples. Sector growth rates, competitive positioning, management strength, scarcity value, strategic fit, expected future unit growth rates, profit expansion potential, and a host other factors have significant impact on enterprise value. Nevertheless, we were somewhat nonplussed to see the multiples paid for several recent transactions including McGraw-Hill’s purchase of SNL and Nikkei’s purchase…

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