Module II· Trading ComparablesIntermediate

Question

How do you apply the multiple to the target — a point estimate or a range?

Answer

IB standard

a range approach. Methodology:

Low multiple (25th percentile or median minus 0.5−1.0x) − target EBITDA = lower bound.
High multiple (75th percentile or median plus 0.5−1.0x) − target EBITDA = upper bound.
A midpoint or 'point of view' somewhere in between, based on target specifics (growth vs. comp median, margin position).

Deep diveShow more details

Example

Median 9.5x, range 8.5−11.0x, target grows faster than the median − point estimate 10.0x.

Pitch tip

The football-field slide shows the comps range as a bar, not as a single number. 'EV range $1,275m−$1,650m based on trading-comps NTM EBITDA multiples.'

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