EV/EBITDA
Also called: EV/EBITDA multiple, enterprise multiple
EV/EBITDA values the whole enterprise against its pre-interest, pre-tax, pre-depreciation earnings. It's the default M&A multiple because it's neutral to capital structure and tax, letting a leveraged company be compared with a debt-free one. Its blindness is deliberate and dangerous: excluding depreciation flatters businesses that must constantly replace their assets, which is why it suits software and misleads on manufacturing.
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