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Relationship between growth rate and EBITDA multiple

Summer 2009 Prof. Keith M. Howe DePaul University. Relationship between growth rate and EBITDA multiple. Relationship between growth rate and EBITDA multiple. Note that 1) We can imply the growth rate from the EBITDA multiple 2) CF t+1 = EBITDA(1-T) + Dep (T) - CapEx - NWC.

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Relationship between growth rate and EBITDA multiple

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  1. Summer 2009 Prof. Keith M. Howe DePaul University Relationship between growth rate and EBITDA multiple

  2. Relationship between growth rate and EBITDA multiple Note that 1) We can imply the growth rate from the EBITDA multiple 2) CFt+1 = EBITDA(1-T) + Dep (T) - CapEx - NWC CVt = CFt+1 r - g CVt = EV X EBITDA t+1 EBITDA

  3. Example CFt+1 = EBITDA(1-T) + Dep (T) - CapEx - NWC = 500 (1-.3) + 20(.3) -20 -10 CFt+1 = 326 5,433 = 326 0.10 – 0.04 Assume that r = 10% and g = 4% 5,433 = (EV/EBITDA) x 500 (EV/EBITDA) = 10.866 When the growth rate is 4%, it implies that the EBITDA multiple is 10.866.

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