Corporate Finance
[From the Front Lines of Corporate Value Management]
For companies aiming for growth through IPOs or M&A, "corporate value management" is a central theme of management.
Corporate value (Enterprise Value) is generally
"EBITDA (Operating Profit before Depreciation) × Corporate Value Multiple (EV/EBITDA Multiple)"
often evaluated as.
EBITDA is an indicator that represents earning power close to cash flow, taking into account depreciation and amortization, and its expansion is the foundation for improving corporate value.
On the other hand, the corporate value multiple varies depending on the industry, growth potential, profitability, and company size, and is generally considered to be around 5 to 10 times.
For example,
・Multiples tend to be higher in high-growth sectors such as IT, AI, and SaaS
・Multiples tend to be relatively lower in mature industries
・Even within the same industry, companies with larger scale or higher earnings stability tend to be valued with higher multiples
there are.
In addition, companies with well-established internal controls and governance systems, and high management transparency and reproducibility, are more likely to be highly evaluated by investors and buyers, which can lead to an increase in the corporate value multiple.
In M&A, in addition to the simple addition of EBITDA through acquisition, it is expected that corporate value will be further enhanced through profit expansion due to synergy effects and improvements in the corporate value multiple.
Furthermore, IPOs and preparations for listing on the Tokyo Pro Market (TPM), which has been attracting attention in recent years as a first step, require the development of governance systems and internal control systems. These serve not only as a response to listing examinations but also as a foundation for long-term corporate value improvement.
Note that corporate value is generally
"Equity Value (Market Capitalization) + Net Interest-Bearing Debt (Interest-Bearing Debt - Cash and Deposits)"
expressed as.
If cash flow increases due to the expansion of EBITDA and the repayment of interest-bearing debt progresses, it is expected to lead to an improvement in equity value along with an improvement in financial health.
For executives of small and medium-sized enterprises and venture companies considering IPOs, Tokyo Pro Market listings, MBOs, and M&A, Value and Advisory LLC provides hands-on, side-by-side support for improving corporate value from both the perspectives of corporate finance and governance.
▼Website
http://value-and-advisory.com
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