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50?
10 times 5, since EBITDA is one fifth of the revenue?
Yeah that makes sense, but why are you multiplying by 5?
Just pick a random number for revenue to see it. If rev is 100 then EV is 1000. If you have 20% margin then ebitda is 20. What’s the multiple then?
$1B TEV company would have $100M of revenue. 20% margin means $20M of EBITDA. $1B / $20M = 50x.
The denominator is 1/5th what it was in the case of revenue so the effective multiple needs to be multiplied by the inverse (5).
edit: comment above me must have been posted while I was writing this but basically said the same thing
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