Mark Osborne explains how qualitative factors can swing a company's valuation multiple by two to four times. Analysts look at growth trends, profit margins, financial record quality, and cost accounting to assess growth potential and determine what multiple to apply to cash flow.
parallel to the financial assessment of a business to get the cash flow valuation. And, you know, depending on what the cash flow is in a business, let's say we go to the midpoint on multiples. Now, we know that there might be 2x lower for companies that don't have the qualitative factors, and there might be 3 to 4x higher for companies that do. And it's those qualitative factors that we dig into where we look at What's their history of growth and decline coupled with their margins and their financial recordkeeping? Do they have good financial recordkeeping? Are they, are they really assessing all direct costs to, to the cost of goods so that they understand their margin, which is really important for every industry? We look at the growth potential of a business.
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