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Value/EBITDA Multiple
Value/EBITDA Multiple
500
400
300
200
Std. Dev = 14.65
100
Mean = 12
N = 3820.00
VEBITDA
FCFF1
V0 =
WACC - g
l
Value
Working Capital/EBITDA
(1- t)
Depr (t)/EBITDA
CEx/EBITDA
=
+
EBITDA
WACC - g
WACC -g
WACC -g
WACC - g
A Simple Example
l
In this case, the Value/EBITDA multiple for this firm can be estimated
as follows:
Value
=
EBITDA
(1- .36)
.10 - .05
(0.2)(1 - .36)
0.3
0
= 8.24
.10 - .05
.10 - .05
.10 - .05
14
12
Value/EBITDA
10
0
0%
10%
20%
30%
Tax Rate
40%
50%
10
Value/EBITDA
0
0%
5%
10%
15%
Net Cap Ex/EBITDA
20%
25%
30%
10
Value/EBITDA
WACC=10%
WACC=9%
WACC=8%
0
6%
7%
8%
9%
10%
11%
Return on Capital
12%
13%
14%
15%
Value
$ 114.32
$ 5,158.04
$ 1,368.35
$
83.57
$ 982.67
$ 931.47
$ 554.96
$ 116.93
$
67.66
$ 344.93
$ 170.42
$ 661.18
$ 112.42
$ 1,708.57
$ 259.16
$ 221.09
$ 844.39
$ 422.79
$ 1,632.30
$ 141.77
$ 164.17
$ 472.27
$ 437.71
$ 983.86
$
12.50
$ 578.78
$
73.64
$ 182.30
$ 716.15
$
56.92
$ 140.68
$ 1,002.20
$
70.23
$ 835.58
$ 212.95
$ 2,700.69
$ 1,247.30
$ 2,514.99
$ 269.01
$ 727.50
$
83.25
$ 160.45
$ 678.38
$
5.60
EBITDA
Value/EBITDA
$
48.81
2.34
$ 1,838.26
2.81
$ 447.67
3.06
$
27.05
3.09
$ 310.22
3.17
$ 292.82
3.18
$ 169.38
3.28
$
35.62
3.28
$
19.44
3.48
$
97.85
3.53
$
45.13
3.78
$ 174.28
3.79
$
28.94
3.88
$ 427.30
4.00
$
64.35
4.03
$
51.44
4.30
$ 196.15
4.30
$
95.20
4.44
$ 345.78
4.72
$
29.93
4.74
$
34.10
4.81
$
96.88
4.87
$
89.61
4.88
$ 198.91
4.95
$
2.33
5.37
$ 107.15
5.40
$
13.48
5.46
$
32.72
5.57
$ 120.94
5.92
$
8.79
6.47
$
21.51
6.54
$ 151.18
6.63
$
10.38
6.77
$ 121.34
6.89
$
30.38
7.01
$ 366.99
7.36
$ 166.71
7.48
$ 333.13
7.55
$
28.20
9.54
$
64.62
11.26
$
6.99
11.91
$
12.96
12.38
$
51.76
13.11
$
(0.17)
NA
5.61
A Test on EBITDA
l
Regression
Residual
F =
Sum of Squares
95890904.61967
320857161.28121
192.46490
Signif F =
Mean Square
47945452.30984
249112.70286
.0000
SE B
Beta
Sig T
-.970608
41.6294
4.949412
.547679
2.1266
.383466
-.043341
.478746
-1.772
19.576
12.907
.0766
.0000
.0000