Whirlpool has acquired the company behind the waste disposal system InSinkErator.
👉Background: Let's look back to the year 1938. It's one year before World War II begins, Italy won the FIFA World Cup and the InSinkErator is born.
👉 What happened: InSinkErator is the waste disposal system that sits in boujee sinks and crushes every piece of waste in its wake.
👉 What else: Now Whirlpool, the whitegoods company, has acquired Emerson Electric Co, the company behind InSinkErator for US$3 billion. Turns out the InSinkErator company generates nearly $600m USD in revenue per annum. Not beehd at all!
💡Valuing a company can take many different forms. And each of these forms can result in very different valuations for a company.
💡For an earlier stage company, you might choose to use a multiple of the company’s revenue. But for a later stage company, you might look into the company's price to earnings ratio (P/E ratio) and compare that to similar companies.
💡In this case, Whirlpool used a multiple of InSinkErator’s EBITDA (earnings before interest, depreciation and amortisation). And apparently 18.1 x EBITDA was the magic number for Whirlpool.
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