EV/EBITDA Multiple
The ratio of Enterprise Value to EBITDA, the primary valuation metric used to price businesses in M&A transactions.
Also known as: EBITDA multiple, EV/EBITDA, Acquisition multiple
One-line definition
EV/EBITDA is the price-to-earnings shorthand of M&A: how many years of EBITDA does the buyer pay for the whole business?
Formula
EV/EBITDA = Enterprise Value ÷ Normalized EBITDA
Context
Multiples vary by sector, growth rate, and market cycle. Software companies trade at 15–25×; industrial businesses at 6–10×. TS work directly affects the denominator — every €1m of EBITDA add-back at a 10× multiple means €10m of deal value.
Related terms
Enterprise Value (EV)
The total value of a business, representing what a buyer pays for 100% of the company on a cash-free, debt-free basis.
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortisation — the most cited profitability proxy in M&A.
Normalized EBITDA
EBITDA restated to remove one-off items and reflect a sustainable, run-rate level of profitability.