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Reply To: My business have been valued at 3.5 times EBIT. In light of massive losses In March, April, May and most likely June, can these losses be ‘normalised’ i.e removed in a a valuation? Or is that just a discussion to be had with a purchaser. Also, for a service based business being bought my another service business, what is the spectrum or cash vs workout that is considered normal?

Hi, it is reasonable to expect that the covid months will be normalised however depending on the sector you operate in, your future earnings multiple could be under significant pressure. For example, food manufacturing companies may see an uplift in multiples whereas a hospitality business will likely see the opposite.

Many factors come into play when determining value also, it’s impossible to give a solid opinion without knowing more about your business.

Happy to answer in more detail if you would like.

Greg