Login to Business.com

Social Login
Login with Your Account
Forgot Password?
New to Business.com? Join for Free

Join Business.com

Sign Up with Your Social Account
Create an Account
Sign In

Use of this website constitutes acceptance of the Terms of Use, Community Guidelines, and Privacy Policy.

What is the approx. valuation of a "start-up" that will do $250 million in revenue at about 50% profit margin in 2018?

Private biotech/health/pharma company is about 6 years old and has been profitable from day one. Did about $45mil @ 25% profit margin in 2015, about $100mil @ 30% profit margin in 2016, about $160mil @ 40% profit margin in 2017, and will do about $250mil @ 50% profit margin in 2018. What is the approximate valuation? The company is in a very difficult industry to break into and has multiple revenue streams. The largest is a B2C model, but also has a large B2B offering and a subscription model.

Answer This Question
Expert Answers
Sort by Date Sort by Votes

These are very impressive growth and profit figures in an industry that has great public and venture capital interest. Congratulations on reaching near-unicorn status.

Valuating a company that has reached this size is more complicated than just using an industry-centered earnings multiple. The additional information required to reach a valid approximation is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), current and future gross and net profits, the value of tangible assets and additional working capital requirements. Then the earning multiple needs to be adjusted by the following criteria: continuity of income, competitive rating, industry rating, company longevity, company growth potential, company status.

If you are contemplating an IPO, the sale of business, or merger, I would advise you to turn to a professional evaluator. Many larger business consulting companies and business brokers provide this service. However, they are expensive.

If you just need a ball-park figure that will provide a reliable approximation, there are online valuation apps can be used for this purpose. Check out: https://gsmbizsystem.com/priceandplans/financial-controls.


The answer of course is that a great deal more information is needed. How is the business operated, what is happening in the industry, what are those multiple revenue streams and are any of them recurring revenue, is there any patented technology, what products and services are unique and is that competitive advantage sustainable, and most importantly, what will the business do in the next five years. What happened the past 6 years is interesting, but irrelevant, except to the extent that it might be an indication of what the business will do in the future. Will a larger company be interested in acquiring this business? Why? Without understanding all of these factors and more it is not possible to give a valuation number.

Are you sure you want to report this content?


Reset Your Password

Enter your email address and we'll send you an email with a link to reset your password.