The multiples method is used to estimate the economic values of companies based on market data.

It turns out that the market data and the evaluated company have different characteristics, and adjustments and estimates are necessary to allow the comparison of the data.

The necessary adjustments are called relativity and involve size, management, capital structure, market coverage, among others.

The main advantage of this method is agility, and the main disadvantage is low accuracy.

The multiples used depend on the availability of data and can be: amount/billing; value/profit; value/sales; value/EBIT; value/capital invested, value/production; value/EBITDA.

The adjustments of the values can be expressed in the same ratio of the multiples:

Enterprise Value = 6 x EBITDA + 0.5 EBITDA (diversified market) – 1.0 EBITDA (higher financial risk) = Final 5.5.

Mynarski, Multiple Method Valuations.