Business valuation by EBITDA multiple
The value of a business and the value of its shares are not the same: debt and cash sit between them. Make a first approximation with an EBITDA multiple and see how much it changes with the multiple.
By multiple
With the same debt and cash.
| Multiple | Enterprise value | Equity value |
|---|
How to estimate a company's value with an EBITDA multiple
Enter normalized EBITDA, the multiple you want to test, financial debt, surplus cash and, optionally, your shareholding. The calculator gives you the enterprise value, the equity value and a table of how it changes with the multiple.
Example: with EBITDA of 200,000 and an illustrative multiple of 5, the business would be worth 1,000,000. Subtracting 300,000 of debt and adding 80,000 of cash, the shares would be worth 780,000. At a multiple of 4 they would be worth 580,000; at 6, 980,000.
How it is calculated
- Enterprise value = normalized EBITDA × multiple.
- Equity value = enterprise value − financial debt + surplus cash.
- Your share = equity value × your percentage.
Assumptions
- It is an illustrative approximation, not a valuation: the multiple depends on the sector, size, risk and timing.
- Normalized EBITDA: excluding one-off income and costs. Surplus cash: cash not needed for day-to-day operations.
Frequently asked questions
How do you value a company using multiples?
By multiplying a business figure, such as EBITDA, by a multiple that reflects what is paid for similar companies. It is a quick method for a first approximation, not a full valuation.
What is the difference between enterprise value and equity value?
Enterprise value is what the business itself is worth. To get to what the owners' shares are worth, subtract financial debt and add surplus cash.
Which multiple should I use?
It depends on the sector, size, growth, risk and market conditions. The calculator does not suggest one: try several and see in the table how much the result changes.
What is normalized EBITDA?
Operating profit before depreciation and amortization, excluding one-off or non-recurring income and costs. That way it reflects what the business usually generates.
Can I use it to buy or sell a company?
It helps you get an idea and understand what drives value. A real deal needs a full analysis of the business, the sector and the transaction, usually with a professional.