Multiple valuation (year & ND)

Valuing a company and using multiples:

  1. EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda?
  2. Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which is June 15 to derive the equity value?

thanks

 

1) Depends on whether you're looking at forward or historic multiples. If the multiple being used is EV / NTM EBITDA, then to find the EV as at 12/31/2015, you would look at 2016 (NTM) EBITDA. Similarly, is you're using EV / LTM BITDA, then to find the EV as at 12/31/2015, you would use 2015 (LTM) EBITDA

2) To derive the equity value as at 12/31/2015, you would deduct net debt as of that date. Basically, you deduct the net debt as of the EV date

Hope this clarifies things

 

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