Exit multiple
Definition · Level 10 · Valuation
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A terminal value found by applying a peer multiple, usually enterprise value to EBITDA, to the final forecast year’s EBITDA (operating profit before depreciation and amortization), instead of using a growth formula.
Example
Year-5 EBITDA $250M × 8x = $2,000M terminal value.
Where Tradecraft teaches it
Level 10 · Valuation, in the lesson “The DCF: valuing a business in four steps”: Unlevered free cash flow, terminal value, discounting at WACC, and from enterprise value to a price per share.
Related terms
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- Sensitivity tableA grid showing how a model’s answer changes when two key inputs move.
- Terminal valueThe value of all cash flows beyond the explicit forecast, from the Gordon growth formula or an exit multiple.
- Unlevered free cash flowCash the operating business generates for all capital providers, before interest: operating profit after tax + depreciation and amortization −…
- 10-K / 10-Q / 8-KFilings with the US Securities and Exchange Commission: the audited annual report, the unaudited quarterly report, and the current report for…
- Accretive buybackA share repurchase that raises earnings per share: the earnings yield of the shares bought (EPS ÷ price) beats the after-tax cost of the cash used.