Quick and dirty summary of EBITDA multiples for companies of various industries as well as sizes sourced from NYU, Pepperdine and Biz Buy.

Key thing I take from this is the power law function for EBITDA multiples highlighting that between ~$100K up to $4M you see a rapid increase and then a tapering effect.

If you want to get truly dialed in, you need to pull at least 10-20 comparable sales for you specific business type and size.

Multiples Work.pdf

Was trying to get a handle on business valuations across different market sectors from Real Estate to Oil and Gas and overall Business. Here are the quick observations I took from this exercise;

1) Key is to realize industry/size arbitrage when present

-> Small gas operator views there asset on a lower Ebitda basis relative to the industry market (i.e. 3-4x Ebitda value vs PV15 value)

2) Real Estate’s Capitalization Rate <> Oil and Gas’s Present Value Discount Rate (for PDP @ hyperbolic decline, PUD/PROB/POSS & Powerlaw, etc. becomes more complex)

3) Stating the obvious, but size matters, scaling from $1M Ebitda to $5M has material impact on valuation of business

4) Transforming from one industry to another can be profound (i.e. Transforming a <$1M construction business to a mostly IT based business can 2x value with 3.5x going up to 7.0x)

5) Delta on data set vintages emphasize using relative concepts vs executable action (i.e. update/refine before acting)

Real Estate vs Oil and Gas vs Small Biz Metric Comparisons.pdf


What could be some of the top Multi Family Commercial Real Estate cities to invest in?

A question we wanted to try and answer before diving into a specific city.

If you want to get to the meat and potatoes, just check out slides 2, 21, 33, 36 and 44.

A lot will change with the current world pandemic as well as upcoming 2020 US Census. Analysis has its shortfalls for sure (see slide 4), so very open to input/feedback.

Multi Family Market Selection.pdf


Quick Exercise on Real Estate Impact to business valuation


I wanted to get a quick feel (i.e. < 30 min) for if/how real estate being included on a business purchase would impact valuation.


  • Longer amortization period (i.e. 25-30 years vs 7-10)

  • Higher down payment (i.e. 25-30% vs 10-15%)


  • The answer is unfortunately complex given the need to look at the real estate and business returns separately and then holistically as well as the exponential complexity of inputs for two full models.


  • Stating the obvious, but regarding just the business acquisition side the longer amortization period increases IRR/COC

  • Also stating the obvious, regarding the business acquisition the higher down payment decreases IRR/COC

  • Because of these linearly inversely related facets the impact can be positive, negative or neutral related to IRR/COC and will need to be modeled on a case by case basis for impact

    • See below for example of a base case 45%/84% COC/IRR deal shifting to 48%/92% for one deal (i.e. improves economics)

    • See below for another example of a base case 58%/140% COC/IRR deal shifting to 56%/129% for one deal (i.e. worsens economics)

  • Relating to real estate assuming the note does nothing but allow for a lower down payment it is beneficial, but not material

    • If amortization length has to be adjust downward at all it is clearly a negative in a very material way