"Is a higher multiple good or bad?"
O
Tags:
(Orangutan, 264
Points)
on 1/1/13 at 7:44pm
How would you guys answer this question with respect to
EV/EBIT
EV/EBITDA
I don't think its a straight forward good or bad answer, I think it depends on things such as relative comparison to other companies in the industry...is a higher enterprise value good in general though? Again it'd depend on the amount of debt imbedded imo






If I'm selling: Good. If I'm
If I'm selling: Good.
If I'm buying: Bad.
The question you should ask
The question you should ask is can I find a guy who is willing to buy it at a higher multiple.
this question is so broad
this question is so broad that is meaningless...
It is always important to
It is always important to sanity check every multiple. Looking at the fundamentals, say 8.0x EV/EBITDA represents a particular terminal growth rate if valued using a DCF. I would suggest putting together a simple model to see whether this number makes any sense at all and then go from here... At the same time it may sound like you are asked about your intuition around the basic understanding of comps analysis and through the cycle multiples...