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Valuation with Multiples: A Conceptual Analysis

  • Andreas Schueler EMAIL logo
Published/Copyright: February 14, 2020

Abstract

Estimating the market price of a company with multiples is common practice. Especially if several multiples are used simultaneously, the bandwidth of value estimates might be wide. The paper aims at narrowing down this bandwidth with a conceptual analysis. I analyze the different ways to average peer multiples, the links between common multiples (‘inter-multiple’ analysis), the relevance of their components (‘intra-multiple’ analysis) and the resulting choice between a bottom-up and a top-down approach for deriving a multiple, and the impact of differing capital structures.

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Published Online: 2020-02-14

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