valuation
An EBITDA multiple is enterprise value divided by EBITDA—the workhorse mid-market pricing factor. It answers how many years of current (or forward) cash earnings the market or a buyer is paying for the operations, before leverage.
When a banker says "the business is an 8-times-EBITDA company", they mean an EBITDA multiple:
EBITDA multiple = enterprise value / EBITDA
It is the same ratio as EV/EBITDA; the conversational label emphasises the pricing habit of mid-market M&A. Enterprise value sits in the numerator so leverage does not masquerade as a cheap or expensive equity story. EBITDA sits in the denominator as a crude operating-cash proxy before capex, tax and working capital.
Damodaran publishes global sector EV/EBITDA series precisely because this ratio is how relative value is screened at scale. It is still only a screen.
A revenue multiple is the fallback when EBITDA is negative, early, or incomparable. Valuation multiples as a panel stop you from worshipping a single x.
Solstice Safety Co. is invented, illustration only.
| Item | Amount |
|---|---|
| Reported EBITDA | €4.40m |
| Owner excess compensation add-back (buyer-accepted) | €0.35m |
| One-off warehouse move | €0.15m |
| Adjusted EBITDA | €4.90m |
| Peer median EV/EBITDA (comparable companies) | 8.0x |
| Precedent median (precedent transactions, control) | 9.2x |
| Selected 8.6x on adjusted EBITDA | EV €42.1m |
The 1.2x gap between trading and transaction medians is the usual control-and-synergy wedge. Paying 9.2x as a financial buyer without synergies is how IRRs disappear.
Sponsors live in entry and exit EBITDA multiples; debt packages are covenanted off leverage to EBITDA; earn-outs are often keyed to it. Large announced deals are still digested as an implied EBITDA multiple so committees can compare them with history. Quality of earnings is therefore not a side workstream: it is the multiple.
EBITDA ignores maintenance capex, tax, stock-based pay in some adjustments, and pension cash. For banks it is the wrong metric. For hyper-growth unprofitable firms it is undefined or absurd. Through-cycle businesses need a normalised denominator, not last year's boom.
Dazur quotes EBITDA multiples only off a diligence-grade adjusted EBITDA and a named peer set. Owners who walk in with "10 times" and a statutory P&L get a rebuild; owners who walk in with a QoE-ready bridge get a process. The x is earned in the adjustments, not in the font size on the teaser.