Company Valuation Calculations

Overview

The PPP (Paycheck Protection Program) loan amounts were based on 2.5x monthly payroll. Using this information along with industry-specific data, we can estimate company revenue and EBITDA.

Calculation Steps

1. Calculate Annual Payroll

Since the PPP loan was 2.5x monthly payroll, we can derive the annual payroll by:

• Dividing the loan amount by 2.5 to get monthly payroll
• Multiplying by 12 to get annual payroll

2. Estimate Revenue

Using industry-specific payroll percentages from NAICS data, we can estimate total revenue by dividing the annual payroll by the typical payroll percentage for that industry.

3. Calculate EBITDA

Using industry-specific EBITDA margins from NAICS data, we multiply the estimated revenue by the typical EBITDA percentage for that industry.

Example Calculation

For a company with:

• PPP Loan: $100,000
• Industry Payroll Percentage: 30%
• Industry EBITDA Margin: 15%

Step 1: Calculate Annual Payroll

Annual Payroll = ($100,000 ÷ 2.5) × 12
Annual Payroll = $40,000 × 12
Annual Payroll = $480,000

Step 2: Estimate Revenue

Estimated Revenue = $480,000 ÷ 30%
Estimated Revenue = $1,600,000

Step 3: Calculate EBITDA

Estimated EBITDA = $1,600,000 × 15%
Estimated EBITDA = $240,000

Industry Margins

Below are the industry-specific margins used in our calculations, based on NAICS (North American Industry Classification System) data: