Valuation: Comps & Precedents
You apply the peer median NTM EV/EBITDA multiple to your target's LTM EBITDA. What's wrong, and which direction is the error?
Model answer
Period mismatch. For growing companies, NTM EBITDA exceeds LTM EBITDA, so NTM multiples are systematically LOWER than LTM multiples. Applying a (lower) NTM multiple to the target's (smaller) LTM…
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