Which multiple should I use?

Whatever comparable businesses in your sector have actually transacted at. A multiple picked without evidence is a guess wearing a formula.

Because the buyer inherits it. An enterprise worth ten crore with three crore of debt is worth seven crore to the shareholders.

Businessvaluation

Business Valuation Calculator

Indicative valuation on three multiple bases. Multiples value the enterprise, and net debt must be subtracted to reach what the shares are worth, which is the step most often skipped.

Also called: company valuation calculator, business worth.

Indicative equity value

₹10,40,00,000

₹10,40,00,000 on the EBITDA basis, from an enterprise value of ₹11,60,00,000 less 1,20,00,000 of net debt. The revenue basis gives ₹11,10,00,000 and the earnings basis ₹12,90,00,000, a spread of 24%.

Enterprise value

₹11,60,00,000

On the revenue multiple

₹11,10,00,000

On the earnings multiple

₹12,90,00,000

EBITDA margin

17.68%

Spread between methods

24%

Implied price to earnings

12.09

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

How this is calculated

An EBITDA multiple gives enterprise value, the worth of the operating business regardless of how it is financed. Equity value is what remains after repaying net debt, and forgetting that step overstates what a seller receives by exactly the debt. Three bases are shown because they rarely agree: a wide spread means the multiples are not consistent with each other and at least one is wrong for this business.

multiples value the business; subtracting net debt values the shares

m: Multiple
EV: Enterprise value

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a mid-sized business at eight times

Annual revenue: ₹8,20,00,000
EBITDA: ₹1,45,00,000
Net profit: ₹86,00,000
EBITDA multiple: 8
Revenue multiple: 1.5
Net debt: ₹1,20,00,000

Indicative equity value₹10,40,00,000

1.45 crore times 8, less 1.2 crore of debt

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no debt makes enterprise and equity value equal

Annual revenue: ₹8,20,00,000
EBITDA: ₹1,45,00,000
Net profit: ₹86,00,000
EBITDA multiple: 8
Revenue multiple: 1.5
Net debt: ₹0

Indicative equity value₹11,60,00,000

boundary

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Method and limits

What it assumes

Multiples are supplied by you and are the entire answer. Nothing here selects an appropriate one.

What it deliberately does not model

This is not a valuation. Real valuations require comparable transactions, diligence and a professional opinion.
Small private businesses trade at large discounts to listed multiples for illiquidity and key-person risk.
Normalising earnings for owner compensation and one-offs usually changes the answer more than the multiple does.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Which multiple should I use?: Whatever comparable businesses in your sector have actually transacted at. A multiple picked without evidence is a guess wearing a formula.
Why subtract debt?: Because the buyer inherits it. An enterprise worth ten crore with three crore of debt is worth seven crore to the shareholders.