Relevant multiples for each industry?

awesome -- very helpful

Kenny_Powers_CFA:

I think you should take a step back.

If you don't know a) how to interpret/replicate a Morningstar multiple or b) how to find your own industry multiples, you should not be trying to look at merger arb trades which will complicate things with synergies, control premiums, etc plus non-fundamental issues like deal psychology and regulatory reviews. Instead you should be focused on much more basic understanding of valuation techniques.

For example, you don't say what type of multiple it is (EBITDA vs EPS? Trailing vs forward? Trading multiple vs. takeover multiple?). I assume (hope) that you know and just didn't mention it. If you know the company and Morningstar's multiple you should be able to try to replicate it from the company's filings.

I would also make sure you understand, on an extremely basic, conceptual level, "what" a multiple is and "why" it matters/why a company "does" or "should" trade at a certain multiple.

Two other notes/comments: A) the "right answer" for an investment decision is almost never "the multiple is x but it should be y" B) Proxy statements generally include fair value opinions that list comparable company/transaction multiples that the advisory firm has chosen.

Tbh, although I knew different multiples exist, I had not thought of defining the type of multiple (I usually think of it in terms of EV/EBITDA). This is just learning for me. I would never go in to anything with this as a representation of my skill...I really want to get this down (even if it's just for leisure...i know, dafuq right?)

I'll definitely take a look at the proxy now that I know it exists, but not until I read a little bit more. I know strategic rationale is tantamount, but I want to get the model mechanics and thought process out of the way. I feel like by doing that I can then begin to concentrate on corporate strategy (e.g., synergies, hurdles, etc)

Thanks KP