This episode of The Private Equity Experience dives deep into the crucial and often dramatic world of business valuation in private equity deals. Hosts Emily Sander, Rory Liebhart, and Ed Barton explore the complexities, emotions, and strategic considerations determining a company's worth during the "buy phase." They discuss key valuation methodologies (revenue multiples and EBITDA multiples), the importance of revenue recognition, and how "corporate hygiene" (organized and accurate financial records) directly impacts perceived risk and, ultimately, the final valuation. The hosts emphasize that getting the valuation right is paramount, as it sets the tone for the entire private equity hold period and impacts the relationship between the seller and the PE firm. They use the analogy of selling a house to show how expectations and values can differ. The episode explains the importance of understanding your audience in pitches.

Timestamps:

00:00 Introduction: The High-Stakes Deal
00:16 Structuring the Deal: Key Considerations
00:41 Valuation Methodologies and Emotional Factors
02:33 Real Estate Analogy: Setting Expectations
03:34 Investment Bankers: Bridging Perception and Reality
04:50 Revenue Recognition: A Critical Component
07:27 EBITDA Explained: Understanding the Basics
08:34 Adjusted EBITDA: The Art of Creativity
14:43 Choosing the Right Investment Banker
21:45 Corporate Hygiene: Preparing for Valuation
26:27 The Importance of Accurate Valuation
28:43 Conclusion: Setting the Table Right
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Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).

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