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Making an Offer on Existing Business

    • 52 posts
    January 8, 2012 7:58 PM EST

    A good initial offer price guideline for acquiring a company is to examine earnings multiples. Often companies are purchased based on a multiple of earnings. Sometimes the multiple is four times earnings, sometimes lower or higher. The multiple can be based on net income or earnings before interest, taxes and depreciation--EBITDA. A buyer should examine what similar sized companies have sold for and compare that to the multiple of earnings of the business for sale!

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