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M&A: Value a target using multiples
Your MD asks for a quick target valuation. But watch out for the right comparable.
Corporate FinanceBeginnerCalculation
9am. Your MD walks in with a teaser:
"We have an industrial target with €25M EBITDA. Give me a valuation range by noon. Use recent transaction multiples."
Recent comparable transactions:
- Deal 1: TechServ (IT services) — EV/EBITDA = 14x
- Deal 2: ManuPro (manufacturing) — EV/EBITDA = 8x
- Deal 3: AutoParts (auto subcontractor) — EV/EBITDA = 7x
- Deal 4: CloudCorp (SaaS) — EV/EBITDA = 22x
- Deal 5: IndusTech (specialized industrial) — EV/EBITDA = 9x
Your target is an industrial subcontractor.
Given
| Target EBITDA | 25 M€ |
| TechServ (IT) | 14 x |
| ManuPro (manufacturing) | 8 x |
| AutoParts (auto) | 7 x |
| CloudCorp (SaaS) | 22 x |
| IndusTech (spec. indus.) | 9 x |
Question 1/4
Step 1 — Comp selection. Which deals are comparable? Calculate the average EV/EBITDA of relevant deals only (exclude TechServ and CloudCorp).
Your answerEnter a number in x
x
0/4
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