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EBITDA multiple for video gaming industry?

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#1 thomascalc   Members   -  Reputation: 171

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Posted 03 July 2015 - 06:49 PM

I've a well-established project (prototype demo, good team and past, audience data, stats, etc.) in the area of video game industry. The project is at the beginning, we planned to go Kickstarter but in the meantime, at least one investor got interested in it. They already spent hours with me (Viber, real life meeting etc.), so I think this is a good sign.

The EBITDA at the end of the 3rd year in my business plan is 4.5 million USD. What EBITDA multiple shall I use to estimate the value of the company? (i.e. their possible exit multiple at the end of 3rd year)

Remember, it's video games (PC games) industry, not casino or real-world gaming. I can't find such data anywhere. 

 

The capital that my business plan needs from the investor is 2 million USD. If the EBITDA multiple is not small, I probably don't need to offer him too much percent (%) share (considering the $4.5M ebitda at the end of 3rd year).


Edited by thomascalc, 03 July 2015 - 06:52 PM.


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#2 Tom Sloper   Moderators   -  Reputation: 11683

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Posted 03 July 2015 - 10:00 PM

There is no standard valuation method. The entrepreneur typically calculates a higher valuation than the capitalist does. 'Tis always thus, and ever shall be. There are numerous valuation methods - you simply have to come up with a range, and be prepared for the capitalist to come in below that (or at the bottom of your range), and then to negotiate.
-- Tom Sloper
Sloperama Productions
Making games fun and getting them done.
www.sloperama.com

Please do not PM me. My email address is easy to find, but note that I do not give private advice.

#3 thomascalc   Members   -  Reputation: 171

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Posted Yesterday, 01:52 AM

Thanks. Is there at least some minimum EBITDA possible in my case? I mean, since it's a software company that has a high profit in the 2nd and 3rd year, maybe you say it's at least 2.5. But maybe you will say it can range from 0,00001 to anything even in the field of successful software companies.

 

In other words, if I use 2.5 (and I think that's pretty conservative), I will have to defend it if the investor asks: "OK, could you tell why you used 2.5?". (Values typical to a particular industry at least could help in such a case.)


Edited by thomascalc, Yesterday, 01:56 AM.






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