How do non-recurring charges typically affect valuation multiples?

If you're looking at a raw multiple, an increase in non-recurring/extraordinary expenses will increase the unadjusted multiple because it decreases the denominator(earnings, and sometimes EBITDA depending on where the company buries the expense). However, databases will often provide an adjusted/normalized multiple to account for items such as non-recurring expenses. You always want to use an adjusted/normalized multiple because most of the time, you are looking at valuing a business on its normal operations as a going concern.

For example, company A is looking to sell itself. EV of company A is 100M, with 10M in unadjusted earnings. It's raw P/E would be 10x. However, this past fiscal year it was hit with a 10M restructuring expense that isn't recurring and/or part of its normal operations. Therefore, the normalized earnings would be $20M if we add the restructuring charge back, indicating that the adjusted/normalized P/E is actually 5x.

The purpose of the exercise is to compare apples to apples when spreading comps, and to get an accurate sense of recurring cash flows when doing a cash flow valuation such as a DCF.