Problem-solving - Your Business Has a Higher Multiple
- 01:28
Investment Banking Superday interview problem-solving question - Your business has a higher multiple, what does this mean, would you sell?
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Your bakery has been valued at 16.2 times PE based on next 12 month multiples.
the sector average is 15 and half do you have any idea why your valuation might be a little bit higher and would you consider selling your business? Sure. So with regards to the PE I think having a PE slightly above the industry average might be reflective of a few things.
So firstly, it might be that we're experiencing higher or faster revenue growth than our other, sort of competitors within the industry.
it can also be related to risk, um, and other sorts of metrics that can be included within that.
But I think mainly revenue growth is something, if you have faster revenue growth, you could justify a higher PE ratio.
Yes. and what I consider selling my business, I think it depends.
It has to be the right price at the end of the day. Like, if, if the right price comes in and I'm happy with it and that's sort of what I value the company at, then I would perhaps be willing to let go of it. But I wouldn't want to be, sort of undercut for it.
I think also like given, given the current economic climate, having cash and maybe not having a bakery at this time might not be the worst thing.
That is a good suggestion. That is.