My dads business did 15m In ebitda in fy20 and he got an offer from PE for 10x ebitda and he’s taking it. Since offer came they’ve grown like 40% and he’s forecasting over 20m ebitda for 21. I think he should go back to market. He says no it’s a good offer mostly cash and he rolls forward to keep 15% of company. He doesn’t need money as this isn’t his first sale. Seems crazy to leave a lot of money on the table but maybe im thinking about it wrong. What do you all think? He owns 60% of company.

Valuation depends on many things. It could be that that growth potential was already priced in bc that EBITDA multiple is on the very reasonable side. I would try to renegotiate very politely (mostly because funding may already be planned for etc.) and if it isn’t fruitful just let it ride. Buyer could have to reevaluate their diligence and if they’re not willing to do that it could break the deal.

Maybe he can negotiate a performance bonus for after closing or something.

Good for your dad! He has done well and I like that he is sharing some with his long-term employees.

Is your father looking to adopt a 23 year old man?

A bird in the hand is worth two in the bush.

10* ebidta is very high.n usually sales happen with a 4-5 multiple. He should take the deal.

Why put yourself through the stress and potential heartbreak if you’re already filthy rich?

Sounds like your dad has some good perspective on life. Sell-side M&A processes are horrible to go through, most of all for the CEO. My dad has done it multiple times too. If you have tens of millions on the table, incremental $ are borderline worthless relative to another 6 months of stress.

Want a PE Operating Partner? :)

What’s the payout schedule and retainer clause?

I really want to hear the results of this story 12-24 months from now either way

I think he should hire a team of consultants to figure that out.

What type of business

I think your dad should talk to his investment bankers assuming he has some.

Jesus in poor

Does he own the entire company? Pretty sick if he does. Is it marketing tech or just a firm? If latter, 10x seems reallly rich

I’m too poor to be here

One in the hand, is worth two in the bush.

Did they price in that growth? Maybe he just wants to retire...

What kind of business does he run?

Aren’t most deals done on TTM anyway? So the cheque should scale up

What’s the gap in FCF on the growth? The same between 15 and 20? Or has something substantially changed on the balance sheet? How did the 40 percent come about? Organic? Investment?