Comparabile Companies Valuation
Is the aim to get an EBIT or EBITDA multiple in order to value your target company’s equity value?
In that case, I would assume you only use this method to only value private companies. Also, assuming that the point of using comparable company analysis is to value the target’s equity value, would you then add net debt to derive EV, (i.e., EV is what you are ultimately seeking to find)?
For all an all equity transaction use adjusted EBIT or NOPAT.
The goal is to get an EBIT/EBITDA multiple to find enterprise value, which allows you to calculate equity value assuming you have the necessary information.
Total Enterprise Value = Equity Value + Interest Bearing Debt + Preferred Stock - Excess Cash.
So looking at the comparable companies, you would look at their EV/EBITDA multiple and apply that to your target company?
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