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Due diligence – a service worth millions

1 March 2015
Bartosz MIŁASZEWSKI
Let's say I purchased a company and... ... not everything is quite as I had assumed, although nobody was trying to cheat me. Does that sound familiar? I fear it does. In my job I work with people who are in charge of deciding whether to acquire another company, and if so – for what price. In the course of negotiation the price is usually established as a multiple of EBIT/EBITDA/net profit. I am personally not a supporter of this method. In my opinion it is much better to evaluate a company using the DCF methods in three scenarios: positive, neutral and negative. But who has time for such things these days? Due to its simplicity the multiple method is gaining many supporters among decision-makers.