– when an industry or market is described to be ‘worth an estimated x dollars’ what does that actually mean?

Question

– when an industry or market is described to be ‘worth an estimated x dollars’ what does that actually mean?

In: 45

Answer 1

Also for non public businesses the value is often caluclated as the revenue less debts and then times a multiple. Usually like 4 or 5.

Im not an expert here this is what a private equity gentleman told.me when I bought my business.

Essentially the fair value is the price of the actual profit and then the expected esrnings in the next few years.

If a business takes in 150k gross but has 100k debts or expenses then 50k times 5 might value the business at 250k, Which gives you and idea that you could potentially grow or pay for the business in x time then see a return on investment.