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Valuation: Manufacturing Business
The weightings given to valuation methods can differ significantly across industries due to the unique financial structures, operational characteristics, and market dynamics of each sector.
Here’s a generalised guidance on the weightings for a manufacturing business:
| Valuation Method | Weighting | Rationale |
| Return on Investment (ROI) Valuation | Low (10%) | Project-based nature can make ROI a relevant metric. |
| EBITDA Multiplier | High (25%) | Reflects operational profitability in an industry with significant capital expenditures. |
| Simple Cash Payback | Low (10%) | Given the project timelines, understanding payback can be crucial. |
| Revenue Multiplier Valuation | Medium (15%) | Revenue can be a primary measure of growth and success in construction. |
| Balance Sheet Valuation | High (20%) | Tangible assets (equipment, land, etc.) play a significant role in this sector. |
| Discounted Cashflow Valuation (DCF) | Medium (15%) | Forecasting long-term is challenging due to the project-based nature of work. |
| Cash Flow Valuation | Low (5%) | The cyclical nature and project timelines can affect consistent cash flows. |
