ClearCFO learning guide · Updated 27 September 2026 · Educational information
Match the multiple to the measure
An enterprise-value multiple should use a measure before financing costs, such as EBITDA or revenue. Equity multiples use measures attributable to equity holders. Mixing an enterprise-value numerator with an equity earnings denominator creates an inconsistent comparison.
Build a transparent bridge
A simplified equity bridge starts with enterprise value, subtracts debt and adds surplus cash. Real transactions can also involve lease liabilities, preference claims, minority interests, non-operating assets, working-capital adjustments and transaction costs.
Choose comparables carefully
Industry alone is not enough. Growth, margins, risk, capital needs, size, geography and the measurement period affect comparability. A listed-company trading multiple is not automatically the right price for a small private business.
Use a range to ask better questions
Document the source and date of selected multiples. Test sensitivity without presenting the result as a formal valuation or a sale promise. Loss-making and financial-services businesses may require different methods.
Further reading: Aswath Damodaran: introduction to valuation.
Examples are illustrative and simplified. Apply definitions and assumptions appropriate to your business; obtain professional review for material decisions. Read the financial disclaimer.