Ask HN: Raise vs. Acquire multiple rule of thumb? | Hacker News Reader

Ask HN: Raise vs. Acquire multiple rule of thumb?

2 pointsdynofuz3 comments

Is there a rule of thumb for how much a company is sold for by using the amount they've raised as a proxy? Example: company A raised 15M in a few rounds of funding, company Z buys company A for (some_multiple)*15M.

Is that multiple usually 2x, 3x, 10x?

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    previous_year_revenue * ((growth_rate / 10) + 1)

For example, a company with a 50% growth rate and $10MM in yearly revenue can be said to be worth about

    $10MM * ((50 / 10) + 1) = $60MM

The above formula shouldn't be used to determine acquisition price. It mainly provides a sense of how much a company could be worth. Other factors to consider are intellectual property, cash balance, employee quality, etc.

7.5x on average for acquizition. I found an article by TC that answered my question: https://techcrunch.com/2013/12/14/crunchbase-reveals-the-ave...

Current market evaluation.

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