Forward multiples and metrics doubts
Hello everyone!
I have an interview scheduled in the coming days and I have a doubt I wasn't able to find an answer for.
Let's say that for my universe of comparables I am using a NTM EV/EBITDA multiple and I find the median multiple I need to get the EV. Should I multiply my NTM median multiple to my company's NTM EBITDA (and not the LTM one)? There is no need to actualize the EV, right?
Moreover, let's say I'd like to find the TV of a DCF using an exit multiple, and the 10Y EBITDA of the company as the metric. Is it correct if the exit multiple I choose is a LTM EV/EBITDA of a set of comparables and I multiply if for the 10Y EBITDA? Afterwards, should I discount the TV back, correct?
Many thanks and sorry if this sounds dumb, but I can not get over it!
Question 1: yes
Question 2: no, the hypothetical multiple at the exit date times ebitda at that date. There is little certainty to that multiple, but a way to sanity check is the corresponding terminal growth rate. Each TV-multiple is equivalent to a terminal gr - look up biws videos on this. Also note that the exit multiple is likely lower than the preceding ones as forward growth on average declines and multiples with them
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