Should M&A valuations in drinks brands use sales multiples or contribution after marketing (CAM) multiples?

Both metrics are used, but they suit different situations. **Sales multiples** are the simplest and most practical rule of thumb because sales data are public and easy to estimate from retail pricing and volume data; they're useful for initial positioning. **CAM multiples** (gross profit minus marketing spend) are theoretically more pertinent as they reflect true business contribution, but come with practical challenges.

Key considerations members raised:

- Sales multiples are favored in practice because profitability data are seldom disclosed, whereas volume and retail pricing are in the public domain - CAM multiples struggle with dynamic, loss-making brands—many high-growth brands operate at a loss, making CAM-based valuations difficult to apply - **DCF (discounted cash flow) calculations** form the proper basis for specific offers, with sales multiples serving as a useful sanity check or rule of thumb - M&A valuations aren't purely financial—strategic factors (eliminating competition, building tech infrastructure, community engagement) can drive valuations independent of traditional ROI metrics - There's an irony in the sector: profitable businesses may be valued on EBITDA multiples, while loss-making brands can command high valuations on sales multiples if they're perceived as building valuable tech or community

The choice between metrics depends on the target's maturity, profitability, and strategic value rather than one being universally "correct."