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Valuations

  • Healthy company with increasing profit line

    • Strong scenario – look for these sellers

      • Expensive but immediate contribution to bottom line

      • Contribute to group leadership and product/service range

      • IP and goodwill can account for 90% of valuation

    • 8~20 times previous year’s pre-tax earnings

  • Healthy company, flat or descending profits

    • Best scenario for off-shoring, since clients are still there and staff and management infrastructure is still sound

    • 5~7 times previous year’s pre-tax earnings

  • Distressed sale

    • Risky but cheap and accessible

    • Need to review whether clients or tech infra still exists

    • Licences and other intangibles can have value

    • Generally need to settle bank loans and major debtors

    • 1~2 times book value, or, 5% of usable value of tax carry-forwards

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