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EBIT & EBITDA multiple s 5. Working capital needs Thus, I compute pricing multiples based on revenues (EV to Sales, Price to Sales), earnings (PE, PEG), book value (PBV, EV to Invested Capital) or cash flow proxies (EV to EBITDA). Revenue Multiples 4. Long term Reinvestment (Cap Ex & Acquisitons) 4.
A DCF should be a serious consideration for investors appraising mature, stable businesses with predictable cashflows. That is, were the companies in those transactions valued as a multiple of EBIT , EBITDA , revenue, or some other parameter? It is important to identify the key valuation parameter for each deal. Financials.
EBITDA: What’s It Worth? Frequently, the answer is tied to a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization), leaving the further question, “What is EBITDA worth as a key factor in value metrics?”. EBITDA is probably the most common approach today. Johnson , M&AMI.
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