Valuation Multiples applied
About this lesson
⁉️ $500M revenue, $100M EBITDA (20% margin). Revenue multiple 3x. EBITDA multiple 15x. Which is ‘correct’? 💡 Save this for interview prep. Part 1: The math They’re the same multiple, different denominator. EV/Revenue ÷ margin = EV/EBITDA 3x ÷ 20% = 15x ✓ Cross-check: $500M * 3x = $1.5B EV $100M * 15x = $1.5B EV Identical valuation. Both answers are right. Part 2: How it’s applied on the job A multiple is only as good as its denominator is stable AND comparable. The question isn’t which one is “correct.” It’s which denominator you can trust. 🧠 Rule of thumb: pick by denominator quality: • Early-stage or unprofitable → Revenue multiple • Approaching maturity → Revenue still safer • Mature, stable EBITDA → EBITDA multiple • Mature with massively different margins → fall back to Revenue 🤯 A multiple is only as good as its denominator is stable. If the denominator moves around or isn’t comparable across peers, the multiple is noise. Follow @FinanceableTraining to level up your IB/PE game every day. #valuation #ebitda #investmentbanking #ibinterview #interviewprep
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