Technical - Enterprise value question

Alright, let's break this down step by step to understand the multiples of the deal based on the information provided:

1. Determining the Total Equity Value:

   • The buyer acquires 75% of the company for $1.5 billion. To find the total equity value, we divide the purchase price by the percentage acquired:
     • Total Equity Value = $1.5 billion / 75% = $2 billion.

2. Calculating Enterprise Value (EV):

   • Enterprise Value (EV) is calculated as Total Equity Value + Debt - Cash.
   • From the information given: Debt = $75 million, Cash = $125 million.
   • EV = $2 billion + $75 million - $125 million = $1.95 billion.

3. Multiples of the Deal:

   • EV/Revenue Multiple: Divide the Enterprise Value by the Revenue.
     • EV/Revenue = $1.95 billion / $400 million = 4.875x.
   • EV/EBITDA Multiple: Divide the Enterprise Value by EBITDA.
     • EV/EBITDA = $1.95 billion / $125 million = 15.6x.

So, based on the most helpful WSO content, the multiples of the deal are approximately 4.875x for EV/Revenue and 15.6x for EV/EBITDA.

Sources: https://www.wallstreetoasis.com/forum/private-equity/deals-death-and-deception-a-bankers-tale?customgpt=1, https://www.wallstreetoasis.com/forum/hedge-fund/the-hedge-fund-experience-good-bad-ugly?customgpt=1, The Hedge Fund Experience - Good, Bad, Ugly, Deal of the Era, Finance Lingo - PE associates and above tell me your honest opinion