Module II· Multiples & Sector SpecificsBasic
Question
Why do you use sector-specific multiples instead of just EV/EBITDA?
Answer
Why not just EV/EBITDA
In some sectors it is structurally uninformative.
Examples
- Banks: no EBITDA logic (net interest margin = 'revenue') → P/B, P/E
- Real estate: cap rate (NOI/value) instead of EBITDA
- Pre-profitability SaaS: EBITDA negative → EV/Revenue
- Capital-intensive mining: EV/Reserves
- Asset managers: P/AUM
Logic
A multiple needs an economically meaningful link to its driver.
Pitch tip
Sector-specific multiples show sector understanding — senior MDs pay particular attention in industry pitches.