Consolidation--Moguls of M&A

For this reason, it is probably better to limit them to a fairly short term. However, earnouts can serve the purpose of bridging a gap.

PI: What formula do you use to place a value on a company?

Thompson: People tend to think of the valuation process as one in which we take EBITDA and multiply it by an objectively determined multiplier. The process is anything but mechanical. Valuation of a company is both a subjective and objective process involving aspects that range from impressions of management and their strategies to EBITDA for the most recent fiscal year.