valuation
Valuation multiples are the panel of price-to-driver ratios used together in relative valuation: typically EV/EBITDA, EV/EBIT, EV/revenue, P/E and, where relevant, P/B or sector-specific metrics. Reading them as a set is how you see whether a company is cheap or simply different.
Relative valuation earns its keep when several valuation multiples are read together. If a name looks cheap on EV/EBITDA, expensive on EV/revenue, and ordinary on P/E, you have a margin and leverage story, not an automatic buy. CFA curriculum and Damodaran both treat the panel as the method: pick consistent numerators, then explain every outlier.
Typical operating panel:
| Multiple | Numerator | When it is informative |
|---|---|---|
| EV/EBITDA | EV | Cash-generative businesses with comparable D&A and leases |
| EV/EBIT | EV | When D&A differences (asset age, IFRS 16) distort EBITDA |
| EV/Revenue | EV | Losses, turnarounds, or margin incomparability |
| P/E | Equity | Mature earners; dangerous if leverage differs |
| P/B | Equity | Banks, insurers, some asset-heavy names |
Sector overlays matter: NRR and EV/ARR in software, throughput in healthcare clinics, contracted EBITDA in infrastructure.
Higher expected growth and ROIC generally support higher multiples; higher risk and reinvestment needs support lower ones. If you apply an EBITDA multiple from a 20% grower to a 3% grower, the panel will usually "disagree" on revenue and P/E—that disagreement is the warning.
Trading multiples and transaction multiples belong on the same dashboard but in different columns: minority-and-liquid versus control-and-deal.
Four invented packaging peers, illustration only. Figures rounded.
| Company | EV/Rev | EV/EBITDA | P/E | EBITDA margin | Rev growth |
|---|---|---|---|---|---|
| Peer A | 1.1x | 7.4x | 14x | 15% | 4% |
| Peer B | 1.6x | 8.8x | 18x | 18% | 9% |
| Peer C | 0.9x | 9.5x | 11x | 9% | 3% |
| Target (Harbourline, invented) | 1.38x | 8.5x | 16x | 16% | 6% |
Peer C is "cheap" on revenue and P/E because margins are thin and leverage (not shown) may be high; it is not the right EBITDA multiple donor. Peer B is the growth analogue. The target sits between A and B—the panel is coherent.
Investment committees rarely approve a deal off one ratio. They ask whether the entry multiple is consistent with growth, with leverage, and with the exit multiple implied by the hold-period model. Sell-side books that show only the most flattering multiple lose credibility in round two when the buyer rebuilds the panel.
Multiples are silent on off-balance-sheet risk, quality of earnings, and capex cliffs. They also embed the market's current mood. In dislocations, the whole panel can be cheap or expensive together; that is when a DCF (or a through-the-cycle driver) has to referee.
Dazur's valuation packs lead with a primary multiple the buyer universe actually uses, then a small honest panel. We would rather show why one peer is excluded than hide a flattering average. Coherent multiples speed matching; decorative ones create broken first meetings.