Affiliation:
1. Department of Economics and Management , Bundeswehr University Munich , Werner-Heisenberg-Weg 39 , 85579 Neubiberg , Germany
Abstract
Abstract
Estimating the market price of a company with multiples is common practice. Especially if several multiples are used simultaneously, the bandwidth of value estimates might be wide. The paper aims at narrowing down this bandwidth with a conceptual analysis. I analyze the different ways to average peer multiples, the links between common multiples (‘inter-multiple’ analysis), the relevance of their components (‘intra-multiple’ analysis) and the resulting choice between a bottom-up and a top-down approach for deriving a multiple, and the impact of differing capital structures.
Subject
Strategy and Management,Economics and Econometrics,Finance,Accounting,Business and International Management
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