hard · Investment Banking
In a Comparable Companies Analysis, Company A trades at 12.0x EV/EBITDA with a 15% EBITDA margin and 10% growth. Company B trades at 10.0x EV/EBITDA with a 12% EBITDA margin and 5% growth.
Why might a 11.0x multiple be appropriate for a target with 14% margins and 8% growth?
- The target has lower margins and growth than Company A.
- The target is larger in size than Company B here.
- Company B is simply the better acquisition target overall.
- The target's implied P/E ratio is lower than Company A's P/E.
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