EV/EBIT multiple for digital e-commerce businesses

July 25, 2020

by a searcher from The Interdisciplinary Center Herzliya in Tel Aviv-Yafo, Israel

Dear all
Any ideas of EV/EBIT multiple to evaluate digital products e-commerce business like this one...
We are a self-funded search, currently in the process of signing the LOI and willing to get some validation to our proposal and mainly to the EV/EBIT multiple. The Company details are below:

Industry: Online test & assessment preparation (e-commerce)

Product: An online kit (like GMAT)

Financials 2020:
Revenue: USD10m (growing 10-15% for the last years).
EBIT: USD3m (growing 10-15% for the last years)

Business dynamics:
B2C
Non-recurring revenues
Cash conversion: >90%
Competitive landscape
Low entry barriers

Any ideas for relevant sources to evaluate digital e-commerce businesses?
If interested, please reach out directly to redacted

Best and happy weekend, Matan

Reply by a searcher
from University of Pennsylvania in New Jersey, USA

Hi Matan - the benchmarks are trypically viewed as EV/EBITDA ratios. I believe there are a few sources (statista etc.) that should help. As with any valuation - depends on the core fundamentals & assumptions. Per your post, apart from typical concerns of high-competition etc., I would be very concerned about the "non-recurring" part - if you can figure out how to make it sticky & make it recurring -you may have a leg up. Happy to chat more...

Reply by a searcher
from Simon Fraser University in Vancouver, BC, Canada

LTV:CAC is the biggest value driver for an eCommerce business.

How are customers being acquired & how sustainable is that channel? For example, a company overly reliant on organic search to acquire new customers is quite risky given how easy it is to implode that channel.

Happy to talk more offline if you'd like. We specialize in buying eCommerce/DTC brands and have a consulting practice. Just DM me!

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