Investment BankingIntermediate

EV/EBITDA

Enterprise value divided by EBITDA: the most common deal valuation multiple.

Detailed explanation

It shows how many years of operating earnings a buyer is paying for, independent of debt and tax.

Formula

EV/EBITDA = Enterprise value ÷ EBITDA

Example

EV ₹1,150 cr ÷ EBITDA ₹100 cr = 11.5×.

Why it matters

Core multiple in comparable-company and precedent-transaction analysis.

Key points

  • Compare within the same sector.
  • Lower can mean cheaper or riskier.
  • Not useful for banks.

Related terms

Enterprise ValueEBITDAComparable Company Analysis

More in Investment Banking

Investment BankingMergers & AcquisitionsEquity Capital MarketsDebt Capital MarketsPitch BookDiscounted Cash Flow

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.