From a valuation perspective, which of these two advisory firms do you think could command the higher number in the sale of the business?
At first glance, one might be tempted to value Advisory Firm B higher. After all, it is twice the size of Firm A in terms of AUM and it generates 40% more revenue. But, with a 20% profit margin, Advisory Firm A is actually more profitable it has more money left over after compensation and overhead expenses are paid. All else being equal, Firm A would likely command a higher enterprise value.
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