Why in a trading comps valuation analysis, bankers use projected EBITDA or EBIT instead of the LTM metric?
I would like to know why in a trading comps analysis, the metric used to estimate the Enterprise Value (either EBITDA, EBIT or Revenue) is projected, instead of using that of the last 12 months. Is it the same for the P/E ratio? What about transaction comps, do they use projected metrics as well?
Thanks in advance.
Because the acquirer won’t receive the LTM revenue, they’d receive the future financials.
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