DOES IT ALL HOLD TOGETHER? 249
expect profits to increase in future years. Favoured companies might enjoy multiples of
over 50. Anything much more than this appears to be unsustainable. At the peak of the
dotcom boom in 2000, some technology companies traded at multiples of over 600. They
came crashing down.
A quick digression. If there is no hope of a stream of income, if the business is totally on
the rocks, then forget this. It’s a case of settling the creditors and seeing what is left to sell
– and how much you can get for it.
Does it all hold together?
Hold on. I was just talking about funding as if your financial forecasting exercise was
finished. By and large, it is. But you need to sit back and look at the work that you have
done so far. In this chapter, you used your earlier work to draw up balance sheet and cash
flow projections. You identified your surplus or funding requirements. You valued your
business. And you decided how to fund any deficit. Now you should review the risks and
rewards and decide if everything holds together, or rework any parts of your strategy and
operating plans if necessary. Chapter 11 takes a look at this.