We receive many questions about the valuation criteria of targets in the context of a Chinese investor. Here is our compiled generic list of such criteria based on many hundreds of inquires we have handled.

1 2 3 4 5
1 MULTIPLES EBITDA, PE, REV Low: EBITDA 6-8x, PE 10-15x, REV 0,5-1,0x. Mid: EBITDA 8-12x, PE 15-20x, REV 1-2x. High: EBITDA 12-18x, PE 20-30x, REV 2-3x.
2 DCF With or without CN Growth Risks The growth cancels out the (real, perceived) risks
3 IP VALUE Incl. know-how Current territory Extended territory Only know-how No trademarks, or patents
4 BOOK VALUE Rarely used method On liquidation Asset deal Not a relevant method
5 ALTERNATIVES Other comparable parties No other buyers, many other sellers Many other buyers, no other sellers Few other buyers, few other sellers No other buyers, no other sellers Another combination of the mentioned
6 SUBJECTIVE Perception of parties Hope (top of mind) Want (minimum, maximum) Need (urgency)


In addition to negotiations of Enterprise Value, the evaluation of targets will generally fall into 5 categories, putting to question, the Management, the Technology, the Financials, the Strategy and the Deal Process. The most relevant investment cases tend to meet most of these criteria.

1 2 3 4 5
1 MANAGEMENT Incl. board of directors Skills Communication Cooperation attitude Integrity Loyalty
2 TECHNOLOGY Incl. R&D pipeline Advanced enough Client relevant Transferable Competitive Uniqueness (protected?)
3 FINANCIALS Incl. growth projection, biz-plan Solvency Profitability Tangible assets Demonstrated growth Enough growth capital
4 STRATEGIC FIT Incl. shareholders alignment Commercial synergies Balanced power structure among shareholders Agreeable CN plan Stakeholder incentives Risk-reward balanced structure
5 DEAL PROCESS Incl. timing Efficiency to conclude TS/SPA Well-documented, simple DD Flexibility in negotiation, negotiation leverage Simple alignment of interests (powers, rights) Exclusivity

Every deal is unique. For a valuation and evaluation of your company’s potential, please contact us for a non-committing discussion.