easy · Investment Banking ma-lbo
A firm is 'buying earnings cheap' if:
- The target's EV/EBITDA multiple is higher than the acquirer's own multiple.
- The target's per-share price is simply lower than the acquirer's price.
- The target company operates in a distressed industry sector.
- The target's P/E is lower than the acquirer's P/E in an all-stock deal.
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