Great question, there is no golden rule of how much a serial acquirer appreciation is due to growing multiple, organic growth or profit margins. Using Lifco as case study, 67% (6.6x increase in EPS) is attributed to profit growth and 33% multiples expansion. In other successful case studies, profit margins are over 60% and multiple expansion falls within the range of 40%.
I wonder how much of this appreciation is due to multiple expansion and how much is profits growth
Great question, there is no golden rule of how much a serial acquirer appreciation is due to growing multiple, organic growth or profit margins. Using Lifco as case study, 67% (6.6x increase in EPS) is attributed to profit growth and 33% multiples expansion. In other successful case studies, profit margins are over 60% and multiple expansion falls within the range of 40%.