Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

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Multiple

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Category: Business Valuation

Definition:

In the context of business valuations, a “multiple” refers to a financial metric or ratio used to assess the value of a business relative to a specific financial performance indicator. Multiples are commonly employed in various valuation methods to provide a quick and straightforward way to estimate a company’s worth based on certain financial metrics. Multiples are often used in conjunction with financial information from comparable companies (comparable company analysis) or recent transactions (precedent transactions) to determine a reasonable valuation for the business being analyzed. For example, if similar companies in the industry are trading at a certain multiple of earnings, that multiple might be applied to the earnings of the company being valued to estimate its value. It’s important to note that while multiples provide a quick valuation method, they should be used cautiously and in conjunction with other valuation techniques to get a more comprehensive understanding of a company’s value. The choice of the appropriate multiple depends on the industry, the company’s specific circumstances, and the availability of relevant financial data.