medium · Investment Banking valuation-core

Which of the following is a common 'sanity check' performed on the Exit Multiple Method (EMM) results?

1. Ensuring the exit multiple is at least 1.0x higher than entry to show value creation.
2. Comparing the exit EBITDA multiple directly against the company's current trading P/E ratio.
3. Multiplying the exit multiple by the WACC discount rate and confirming the resulting product equals 1.0.
4. Calculating the implied perpetuity growth rate and ensuring it does not exceed nominal GDP growth.

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