What determines the typical Range of Value for every industry?

The typical Range of Value for every industry is primarily determined by the established Range of Multiple. This refers to a range of valuation multiples that are derived from comparable companies within the same industry. These multiples are often based on financial metrics such as earnings before interest, taxes, depreciation, and amortization (EBITDA) or revenue, which provide a standardized way to value businesses relative to their industry peers.

Investment analysts and business valuators commonly use these multiples to derive the value of a company while ensuring that it's aligned with industry norms. The established Range of Multiple can vary significantly from industry to industry, reflecting the unique attributes, risks, and opportunities each sector presents.

For instance, technology companies might have higher valuation multiples due to rapid growth potential and other favorable market trends, whereas more traditional industries might exhibit lower multiples. This method allows stakeholders, whether they're buyers, sellers, or investors, to make informed decisions based on prevailing industry standards.

While factors like the number of competitors, external market conditions, and a company's historical growth can influence a company’s specific value within that range, it is the established Range of Multiple that fundamentally determines the typical valuation parameters for the industry as a whole.