Valuation Multiple
Written by Christopher Krassnig - Founder - Kairos Exchange and ZenoX Media.
Published
- Checks in every memo8
- Automatic on day one3 of 8
- Read by handad spend and processor payouts
- Tracked ecom salesEUR 200M+ZenoX ad-management figures, not Kairos deal volume - Kairos hasn't closed a deal yet.
Valuation Multiple is the ratio between a store's price and its earnings. Divide the price by an earnings figure and the multiple is what comes out. The earnings base can run monthly or annual, and it can be seller discretionary earnings, EBITDA, or another base entirely. Two multiples only compare once both sides share the same base and the same time period.
Why the Base Changes the Number
A multiple only means something once both its base and its period are named, and they are two separate questions. Empire Flippers publishes 30 to 50 times average monthly net profit for an ecommerce business, which is the same underlying range as 2.5x to 4.2x times annual net profit once the period is converted: same base, different period. FE International publishes 2.0x to 4.0x annual seller discretionary earnings for smaller owner-operated Shopify brands, and that figure is not directly comparable to Empire Flippers' converted range even once both sit on a yearly period, because seller discretionary earnings adds the owner's own salary back onto net profit and is structurally the larger number. Converting monthly to annual, or the reverse, settles only the period. The base still has to match before two published ranges say anything about the same store.