In this process, key performance indicators (e.g. sales, EBITDA, net income) of listed companies are compared to their market capitalisation as representatives for the equity value.
As a result, a market price for the respective success variable is implicitly determined. An EBIT multiple of 8 means that investors in the capital market are prepared to pay EUR 8 for EUR 1 EBIT as a performance figure. After determining the chosen multiple, it can be multiplied by the respective success variable of the company being valued, and you will receive an indicative equity value.
The company value can take the form of an enterprise value (value of the equity plus the value of the borrowed capital) or equity value (value of the equity), but both values can be mutually converted using the net debt.
The calculation of the net debt is based on the sum of all interest-bearing liabilities, including pension obligations and leases, in market values, minus the company’s cash and cash equivalents.
The multiples supported by the “MultipleGuide” determine the following value sizes:
Sales multiple -> Enterprise value
EBITDA multiple -> Enterprise value
EBIT multiple -> Enterprise value
Annual net profit multiple -> Equity value
When entering the basic data to determine the net debt (Entries 3 and 4), the enterprise values are translated into the equity value.