20. Sample Valuation Model

I promised I’d let you in the secrets of the cabal. Today I will share with you the secret model that business acquirers use. Remember what Lao Tzu said “Man's enemies are not demons, but human beings like himself.” Now you have their weapon in your arsenal.

It is relatively simple but accurate model that looks at a hypothetical US acquisition today (in the high interest regime we have). It looks at the world from the acquirer’s perspective. The magic numerology is in cell $H39. I highlighted it in red (the color of desire because no numerology is complete without that shit). According to your acquirer, that’s how much value the owner (whoever that is, but somebody from the society) expects at that time. (And hopefully the “owner” read my probability piece and put some good probabilities around it). That’s really the reason they want to acquire you. Obviously most of the numbers and assumptions come from you but they are eyeing that number (or the numbers to the right of that one). The growth assumptions are theirs, though - the secret that they will not want to tell you per se.

Two questions / issues to think about as the newest member of our secret cabal.

How much of that number do you want, if any? If the answer is non-zero, then how much of that number can realistically be attributable to the buyer?

If you don’t understand this model, then get someone (advisor, etc) who does if you want to sell your company.

Even better would be to have such a good relationship with the potential acquirer (your new best friend) to do this together - and share all the secrets, and the spoils.

Welcome to our secret society, drinking deer blood while sinisterly laughing during world domination sessions is truly optional!

Your Friendly Capitalist Cabalist, O.

ps. Do not send a spreadsheet share request. Just make a copy - it is a Google Spreadsheet after all.
ps2. I am feeling extra generous. If you want to go over your own model with me, comment on the LinkedIn post or find me.