I'm looking at a company with 2 unrelated business units: one in healthcare and the other in industrials.
The healthcare unit does 200 in EBITDA while the industrial does 270.
Overall, the company has an EV of 10,000.
How would you go about assessing the respective multiple of each business unit?
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Just go about it as if your valuing two different companies. Sum of the parts and you'll applying whatever the relevant standards are for each business line's respective industry. This depends on if you were to be provided only consolidated financials though, so if you're not then you're shit out of luck. Worst case scenario you can figure out a way to weight whatever the relevant attributable metrics are to each business line and factor this into your final multiple calculations.
In the latter scenario though your basically just going to be trying to color with numbers, so figuring whatever your gut tells you then trying to find justification in the numbers. (I know shady but depending on other circumstances this might be your best option.)
Considering you gave EBITDA for both business lines I'm assuming you have access to financials for both respective business lines, so most likely your lucky and should be able to just do a SOTP with whatever valuation methodology is appropriate for each business line. Hope this helps. PM me for more info if you want.
Much appreciated, that all makes sense!
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