Valuation with Multiples: A Conceptual Analysis

Schueler Andreas ()
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Schueler Andreas: Department of Economics and Management, Bundeswehr University Munich, Werner-Heisenberg-Weg 39, 85579Neubiberg, Germany

Journal of Business Valuation and Economic Loss Analysis, 2020, vol. 15, issue 1, 13

Abstract: Estimating the market price of a company with multiples is common practice. Especially if several multiples are used simultaneously, the bandwidth of value estimates might be wide. The paper aims at narrowing down this bandwidth with a conceptual analysis. I analyze the different ways to average peer multiples, the links between common multiples (‘inter-multiple’ analysis), the relevance of their components (‘intra-multiple’ analysis) and the resulting choice between a bottom-up and a top-down approach for deriving a multiple, and the impact of differing capital structures.

Keywords: valuation; multiples; EV/Sales; EV/EBITDA; EV/EBIT; PE ratio; PB ratio (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/jbvela-2019-0020

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