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When you're doing a DCF, a common way to project into the future is to use a terminal. One is the EBITDA multiple. Which can be something like 7x, 8x, 9x, etc.

How do bankers decide what the multiple should be (ie 7,8,9, or whatever)?

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Comments (6)

  • Boothorbust's picture
  • Bernankey's picture

    Whats your question? The terminal value should just the perpetuity of cash flows in the stable growth period.

  • SpacemanSpiff's picture

    Ideally, you'd be looking at how market is valuing comparable companies and/or any precedent transactions in the space

    In actuality, as an analyst you'll stick in a number your VP or MD gives you

  • Stringer Bell's picture

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