Investment Banking
INTERMEDIATE
Not Started
Valuation
EV/EBITDA, comps, precedent transactions
65 hrs7,000 Questions117 min read
What You Will Learn
Calculate Enterprise Value and Equity Value from any balance sheet
Build and defend a trading comps analysis in under 30 minutes
Apply the right valuation multiple for any industry or deal type
Spot common valuation traps that trip up analysts in interviews
Walk through a precedent transactions analysis and explain control premium
Value a private company using public comparables with appropriate adjustments
Explain the relationship between EV multiples and capital structure
Learning Roadmap
0/6 modulesKey Concepts
Enterprise Value (EV)Total firm value = Equity Value + Debt + Preferred Stock + Non-controlling Interest − Cash. Represents the theoretical takeover price.
Equity ValueMarket value of shareholders' equity. EV minus Net Debt. Used for per-share valuation.
EV/EBITDA MultipleEnterprise value divided by earnings before interest, taxes, depreciation, and amortization. Most common valuation multiple for M&A.
EV/EBIT MultipleEnterprise value divided by operating income. Better than EV/EBITDA for capital-intensive industries.
P/E RatioPrice per share divided by earnings per share. Most common equity multiple; distorted by leverage and one-time items.
Precedent TransactionsHistorical M&A deals used as benchmarks. Typically yield higher multiples than trading comps due to control premium.
Trading Comps (Comparable Companies)Public companies with similar business models used to derive valuation multiples.
Control PremiumExtra amount an acquirer pays over current market price for a controlling stake. Usually 20–40%.
Net DebtTotal Debt minus Cash and Cash Equivalents. Positive when debt exceeds cash; negative when cash exceeds debt.
Implied Share PriceEquity Value divided by diluted shares outstanding. The price-per-share implied by your valuation.
Diluted SharesBasic shares plus the dilutive effect of options, warrants, and convertible securities using the treasury stock method.
Non-controlling Interest (NCI)Portion of a subsidiary not owned by the parent company. Added to EV because EV reflects total firm value.