Metrics and Multiples

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Metrics and Multiples

• Arzac, Chapter 4

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Multiples/Comparable Transactions

• one of leading valuation methods
• use key ratios/relationships as foundation for
  valuation
• often used by investment bankers (also in legal
  cases)
• find several companies that are comparables or
  find industry average to use for comparables

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Key Ratios/Relationships

• Price/earnings
• Price/sales
• Price/book
• sales/employees
• sales/ assets

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