Module II· Trading ComparablesIntermediate
Question
Worked example — TechCo Inc: market cap $1,200m, net debt $200m, NTM EBITDA $150m. Calculate EV/EBITDA.
Answer
Example — TechCo Inc
Inputs:
- Market cap (EqV): $1,200m
- Net debt: $200m
- NTM EBITDA: $150m
Calculation:
```
EV = EqV + Net Debt = $1,200 + $200 = $1,400m
EV/EBITDA = $1,400 / $150 = 9.33x
```
Sanity check
9.3x is plausible for a mid-cap tech company with moderate growth. If the sector median is 11x, the target trades at a discount — the pitch has to explain why (growth below sector, margin compression, a family-control discount).
Deep diveShow more details
Pitch tip
In a comps pitch, always quantify the EV/EBITDA gap to the sector median and explain it qualitatively. 'Target trades at 9.3x vs. sector median 11.0x — implied 15% discount, driven by lower top-line growth (5% vs. 8%) and concentration risk in two key customers'.