DEFINITION
EBITDA Multiple

"EBITDA multiple": 1. A method of entity business valuation which is based on: (i) Accounting Earnings before interest, tax, depreciation and amortisation (EBITDA) and (ii) The ratio of entity value to EBITDA of a comparable business (or a comparable group of businesses). EBITDA multiple = Total value of firm ÷ EBITDA. 2. For example, the total entity value of Company A is $750m and its relevant EBITDA is $150m. Company A's EBITDA multiple: = $750m/$150m = 5 times. 3. The EBITDA multiple can also be used as a very simple comparison or estimation model, for corporate valuation. In another case, say comparable EBITDA multiples for an unlisted Company B are 6, and its relevant EBITDA is $30m. The total entity value of Company B's business can be estimated on this basis as: 6 x $30m = $180m.
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