What your company is worth: (EBITDA × multiple) − NFP

The formula

Here is one of the methods we use to calculate the value of a company:

(EBITDA × sector multiple) − NFP = company value

Working out what a company is worth no longer means just asking what the factory building is worth (which paradoxically can be close to zero, given how property is going in Italy), what the machines are worth, the warehouse stock.

EBITDA is what I'm left with: revenue minus costs, before interest, depreciation and amortisation. This figure is multiplied by the sector multiple. Finally, you subtract the debt, the net financial position (NFP). That gives you the value of the company.

The multiple is the positioning

Now you see why I have always stressed the importance of high positioning. The sector multiple is the indicator that confirms I've positioned my company at the high end of the market. If I'm in no-name engineering and haven't built a brand, the multiplication stops at 3 or 4. If I have a brand, it doubles or triples.

To give you an idea, look at the margins in the 2025 accounts. When I wrote the book, Hermès was at 20–22% EBITDA and the luxury segment at 10–20%. Today Hermès has an operating margin of 41%, Ferrari an EBITDA of 38.8% with a 39% target for 2026, Moncler and Brunello Cucinelli 29%, Louis Vuitton with LVMH's fashion and leather goods division 35%. On the other side, the mass-market car industry: Volkswagen 2.8%, Volvo 3.5%, Ford 3.6%, Renault 6.3%. Stellantis closed 2025 with a negative operating margin and the first net loss in its history. In ten years, the gap between the high end and the mid-market has widened.

The sector multiple is decided by the market. I can decide I'm worth 20x, but if my buyer decides it's 8x, what am I supposed to do? The decision always comes from the seller's and the buyer's willingness to reach an agreement. But the numbers give you an idea. In 2012 the “luxury and fashion” sector stood at 14.6x. Today listed luxury is back between 10x and 13x, with the exception of Hermès at 19x: the world's strongest brand commands twice the others. In Italy, in 2025, private equity paid on average 11.6 times EBITDA, the highest figure in recent years, across a record number of deals.

If you have an unbranded manufacturing SME, the multiplier ranges from 3.5x to 7x depending on the sector. But if in the same company you can develop a brand with its own distribution, you move into the bracket that funds pay 11x or 12x for: the value doubles. That's why you need to develop a high-end policy.

Versace: those who sold at the top and those who bought at the top

To us, who consider ourselves small, Versace looks very big. In reality, on a world scale, it was a small to medium-sized Italian company: 81 showrooms around the world, which is a lot but not a huge number; 123 shop-in-shops, like the ones you find inside La Rinascente; and the online shop. Turnover of €668 million, with €15 million in profit in 2017. In 2016 it was loss-making: they must have decided to sell and did a bit of internal clean-up.

In 2018 Michael Kors, now Capri Holdings, paid $2.1 billion for it, an enterprise value of €1,830 million: 3 times turnover. The multiple, in that case, was practically infinite. The Versaces were true champions at creating a brand with 81 showrooms worldwide and 123 shop-in-shops, and then at selling it at the right moment.

Because the story goes on, and it teaches the other half of the lesson too. Under Capri the brand did not grow: in the financial year ending March 2025 Versace turned over $821 million, down 20%, with an operating loss, and Capri wrote down almost $800 million of goodwill. In April 2025 Prada bought it for €1.25 billion, much less than it had cost seven years earlier, and for 2026 it still expects falling revenue and an operating loss, with recovery from 2027. The family sold at the top. Those who bought without knowing how to manage the brand lost. A brand's value is what the brand is worth in customers' minds at that moment, and it can be destroyed.

To get a sense of scale: Gucci, in 2018, turned over more than 8 billion. That's why I called Versace a small company.

La Piadineria: a luxury multiple on a commodity

The second example is a premium brand in food. The product is perfectly ordinary piadina flatbreads: La Piadineria is a premium brand because it has worked out a method. First, it follows the basic rules of marketing: focus, they do one thing only, the piadina; brand, they developed a brand policy even on a commodity product; own products, their piadinas in different flavours. And interestingly, they built their distribution in shopping centres, where people are hungry and eat.

These are people who work: in their first 24 years they opened more than 200 restaurants, an average of about 10 a year. A sort of Italian McDonald's. In 2017 they generated turnover of €60 million, with EBITDA of €20 million. Along came Permira, an investment fund, which valued the company at €250 million and paid it: 12.5x, a luxury multiple, rewarding the fact that they had their own product and their own distribution.

I tell my courses about it because it's the example closest to an Italian SME: ten restaurants a year is doable for a hard-working family. All it takes is one thing done well, a brand even on a commodity, and your own distribution in a place where there are hungry people.

And here too the story continues. In 2024 Permira sold La Piadineria to another fund, CVC, in a deal worth about €600 million: more than double in six years. In 2025 the chain turned over €265 million with more than 530 outlets across Italy and France, 80 openings in a year, 4,000 employees and an opening in New York. Still piadinas, with the same method: focus, brand, own product, own distribution.

What it means for an SME

Whether you make kitchens, windows, handbags or piadinas, the question to ask yourself is: if a buyer looked at my company tomorrow, what multiple would they give me? If the answer is 3 or 4, you're a manufacturer. If it's 12, you're a brand. Italian products are almost always good: the difference between the two answers comes from all the work that follows, meaning brand, marketing, distribution. And the work starts with costs: you can only step on the growth accelerator once costs are under control; otherwise you grow losses, not profits.

From my book Direct from Milano and my classroom courses. Figures and examples updated to September 2026.