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Valuation Multiple

In one sentenceThe number a buyer multiplies a company's earnings or revenue by to arrive at a price, like "5x EBITDA".

What it means

Multiples vary by industry, size, growth, risk and the market. Higher growth, recurring revenue and lower risk earn higher multiples.

How to use it

FormulaValue ≈ multiple × earnings (or revenue)
Example: 5 × $800,000 EBITDA = $4,000,000

Related terms

Valuation EBITDA EBITA

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