Unlike earnings per share, which is subject to varying levels of debt and interest expenses, EBITDA—Earnings Before Interest, Taxes, Depreciation, and Amortization—provides a view of core operational profitability. The first is historical data, derived from completed acquisitions or past public comps, which provides a factual record of what buyers actually paid.
Selecting the Right EBITDA Multiple Data Sources
Precedent Transactions Another critical avenue for finding EBITDA multiples is analyzing precedent transactions. This metric serves as a standardized bridge between accounting earnings and market value, allowing for a consistent comparison across companies while stripping away the noise of different capital structures and tax jurisdictions.
Financial data providers like Bloomberg, Capital IQ, and Yahoo Finance are indispensable tools for quickly pulling this data and calculating the median or mean for the group. Adjusting for Context and Nuance While the calculation of an EBITDA multiple might seem mechanical, the art lies in the adjustment for context.
Selecting the Right EBITDA Multiple Data Sources
Sources for this data include merger and acquisition databases, financial press releases, and specialized transaction databases. Dividing this enterprise value by the company's trailing twelve months (TTM) EBITDA yields the trading multiple.
More About How to find ebitda multiple
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