What Is A Terminal Multiple?
Terminal Multiple is a term used in aanalysis and valuation and refers to the final multiple projected for a period and is used to predict Terminal Value. The most commonly used one is / .
For example, if a company is projected to have anof $75mm in 5 years time and the / multiple being used is 8.0x, the estimated Terminal Value will be 75 x 8 = $600mm. In this situation the terminal multiple is written as 8.0x / .
Using terminal multiples is one of 2 ways of conducting aanalysis, with the other one being the method (aka Terminal Growth).
- Discounted Cash Flow (DCF)
- Discount Rate
- Earnings Before Interest, Taxation, Depreciation & Amortization (EBITDA)
- Enterprise Value (EV)
- EV / EBITDA
- Exit Multiple
- Gordon Growth Method