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Terminal Value – The Problem with Exit Multiples

Publiziert in Aktuelle Veröffentlichungen Dienstag 29.10.2019
Terminal Value – The Problem with Exit Multiples

by Michael Vitti.

Many practitioners do not use an exit multiple to arrive at a terminal value because an Income Approach-based valuation that relies on an exit multiple to arrive at a terminal value is essentially a Market Approach-based valuation in disguise. Nevertheless it is quite common to use an exit multiple to arrive at a terminal value. The goal is to arrive at a value of the business at the end of the discrete projection period and a hypothetical sale at that time is likely to be based on a multiple of earnings.

The article addresses some problems that must be addressed when trying to identify a reliable exit multiple.

Link to the article.

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