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James Millar
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Yes sorry Peter. Melinda is right – it was the irony that amused me. It is a very good question and there is not always a straight and simple answer.

If you are after a potential trade sale then i would be inclined to look at getting a sale at a revenue multiple rather than capitalized earnings or dcf. Again it’s hard to tell with limited information but selling a bolt on / bolt in solution to a very large industry player (especially in your situation where there are two very large competitors) often works at a revenue multiple. They are chasing market scale and not necessarily stand alone earnings. To give you an example – we were involved in the sale of a business that had year 4 turnover of $70m, literally no profit (but about to have) and it went for $34m as a trade sale to the largest industry player / competitor. They may seem like big numbers but the same can work for sme’s with a much lower profile.

Don’t undersell its value with an earnings valuation alone. Sounds like you have a very good business so the worst that happens is that you keep making great profits each year and move some focus to build another business. If you contact me offline it may even be a good investment proposition for our guys.

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