Comparable Company Multiples Calculator

Inputs

• Subject EBITDA
• Subject net debt
• Comparable 1 — EV/EBITDA
• Comparable 2 — EV/EBITDA
• Comparable 3 — EV/EBITDA
• Size / liquidity discount

How to use this calculator

1. Enter the subject company's EBITDA and its net debt, meaning borrowings plus capitalised leases and any other debt-like item, minus cash.
2. Enter three comparable EV/EBITDA multiples. Comparable means similar growth, margin and capital intensity, not merely the same industry.
3. Set a size and liquidity discount. Smaller, private, harder-to-sell businesses trade below listed comparables; the size of that gap is argued case by case.
4. Read the enterprise value, then the equity value after net debt. Debt is why two businesses with identical EBITDA can be worth very different amounts to their owners.
5. Look at the range across the three comparables before you defend the discount. If they disagree by more than the discount does, the discount is not the argument worth having.

What each term means

EV/EBITDA

Enterprise value divided by EBITDA: what the market pays for a dollar of operating earnings, before the effects of how the business is financed.

Enterprise value

The value of the operating business itself: what you would pay for it debt-free and cash-free.

Net debt

Debt minus cash. Subtracted from enterprise value to get equity value, and the reason the seller's headline price and their cheque are different numbers.

Median vs mean

With few comparables one outlier drags the mean; the median ignores it. Which you use is a judgement, and it is worth stating out loud.

Liquidity discount

A reduction applied because a private company cannot be sold as easily as a listed one. Contested in both size and principle: cited ranges run from roughly 10% to 35%.

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