How to evaluate EV by EV/EBITDA multiple w/ zero EBITDA?

Guys, hope this message finds you well.

Question is pretty straight, but tricky as well. Let's assume I try to evaluate EV of company B using EV/EBITDA multiple of company A, which is fully comparable to A. The only problem is... zero EBITDA of company B.

What should I do? Any thoughts and ideas are welcome.

18 Comments
 

What's up Ivan.

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Best Response

this sounds like a bad comps analysis (unless EBITDA can be normalized to a positive figure - applicable for non-recurring items).

Use EV/Sales or another pre-expense multiple (with the exception of EV/Sales, most are industry specific, like EV/ million subscribers for media or something)

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