Valuing a company and using multiples: EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda? Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which is June 15 to derive the equity value? thanks

Valuing a company and using multiples: EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda? Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which is June 15 to derive the equity value?

This is a question i remember having, and never got an answer. So this is how i look at it: when you're valuing a company, you're looking for the value (most likely) at your exit or over an appropriate time frame, eg, what you'll get paid (and then the a nuance on how you get access to this value). I always find it instructive to revert back to a DCF to frame a view on valuation – so here you’ll be thinking of it in, for example, a 5 year timeframe then steady state from then on.

Aug 14, 2015

Multiple valuation (year & ND)

Valuing a company and using multiples:

EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda?
Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which is June 15 to derive the equity value?

thanks

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7 Comments

sa-jue

11y

Anyone please? thanks

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Ajhere1489

11y

Did n't get your query

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sa-jue

11y

Best Response

Valuing a company and using multiples:

EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda?
Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which is June 15 to derive the equity value?

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Authored by: Certified Hedge Fund Professional - Portfolio ManagerCertified Hedge Fund Pro

sa-jue

11y

Anyone please?

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ball.street

11y

1) Depends on whether you're looking at forward or historic multiples. If the multiple being used is EV / NTM EBITDA, then to find the EV as at 12/31/2015, you would look at 2016 (NTM) EBITDA. Similarly, is you're using EV / LTM BITDA, then to find the EV as at 12/31/2015, you would use 2015 (LTM) EBITDA

2) To derive the equity value as at 12/31/2015, you would deduct net debt as of that date. Basically, you deduct the net debt as of the EV date

Hope this clarifies things

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sa-jue

11y

Thanks- if I want to derive the current stock price based on Dec 2016 EBITDA, do I used the latest net debt or the Dec 2016 one?

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oreos

11y

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