Multiple
A valuation ratio comparing a value with a compatible financial measure, such as enterprise value to revenue or earnings before interest, taxes, depreciation and amortization (EBITDA), or equity value to net income or book equity. Dates and measurement bases must be consistent.
Multiple in round numbers
Hypothetical, in US$ millions: annual EBITDA of 5.83 multiplied by an assumed 8x EV/EBITDA multiple gives enterprise value of 46.64, or 46.6 rounded to one decimal. Using 5.8 instead would give 46.4. Neither amount establishes an actual purchase price or a proven fair value.
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| Measure | Amount |
|---|---|
| Annual EBITDA | 5.83 |
| Assumed EV / EBITDA multiple | 8x |
| Implied enterprise value | 5.83 × 8 = 46.64 |
| Rounded enterprise value | 46.6 to one decimal |
Shayne Fitz-Coy’s definition of Multiple
Essentially, price multiples are just future assumptions about the growth.
Terms Related to Multiple
EBITDA · Book value · Multiple consistency rule · Precedent transactions · All of the glossary