So a few weeks ago I bumped into some old acquaintances from uni who are now working at different firms. I tagged along for a lunch as they discussed some deal that one of them was working on. This guy mentioned that the "EV/EBITDA of the firm we're looking at is XX", to which another guy said "wow, thats expensive."
Feeling instantaneously jealous of this guy's superior deductive abilities, I took to pondering. If I were to deliberate a response to that value, as a student, I would have to sit down with a laptop and do a benchmark analysis with similar industry players to eventually produce an answer, but this guy did it with a chunk of burrito in his mouth.
My question is therefore: For these recurring multiples and ratios, what ranges do you guys consider expensive/inexpensive? And can you make similar spontaneous inferences about these values without any consideration for industry norms and trends?
Bonus question: If you were to be given a set of anonymous ratios and income statements, are you able to pinpoint the industry they pertain to? I had this exercise in an interview once and would love to have some advice on this practice.
Thanks!
