Bob Maiden, Partner - November 14, 2018

This article is the first in a series designed to help staffing company business owners get a better understanding of the current M&A market and terminology. Although the term “multiple” is commonly used in business valuations, this article is intended to provide some additional clarity to the concept. Buyers (“Investors”) make decisions based on an anticipated return on investment. An investment in a diversified stock mutual fund over the past few years averaged about 9% per year, while a lower risk bank CD might have only averaged 2% during that same period. Risk is the key variable that separates one investment from another, and in turn, one rate of return from another. An investment in a business comes with a high degree of risk, thus investors require a relatively high return on investment. Investors make investment decisions balancing risk against opportunity. Click on the attached file to continue reading.