Valuation Multiple

A valuation ratio comparing a company's enterprise value to its EBITDA. EV/EBITDA is one of the most commonly used multiples for comparing valuations across companies, controlling for differences in capital structure, taxation, and depreciation policies.

The ratio of total value returned (realised plus unrealised) to total capital invested. A MOIC of 3.0x means the investment has generated three times the original capital.

A valuation methodology that determines the total value of a diversified company by independently valuing each business segment, product line, or asset category and aggregating the results. Sum-of-the-parts analysis is particularly useful when a conglomerate's divisions operate in different industries with distinct risk profiles, growth rates, and comparable company sets.

A set of globally recognised standards published by the International Valuation Standards Council (IVSC) that provide a framework for consistent, transparent, and objective asset valuation. IVS covers the valuation of tangible assets, intangible assets, financial instruments, and businesses, and is increasingly referenced by regulators and accounting standard-setters.

Earnings Before Interest, Taxes, Depreciation, and Amortisation. A widely used measure of a company's core operating performance that strips out financing decisions, tax jurisdictions, and non-cash charges, making it useful for comparing profitability across companies.

EBITDA expressed as a percentage of revenue, indicating how much operating profit a company generates from each pound of revenue before non-cash charges and financing costs. EBITDA margin is a key benchmark for operational efficiency across industries.

A measure of market concentration calculated by summing the squares of each firm's market share within an industry. HHI is used by regulators and investors to assess competitive dynamics and is relevant to intangible asset valuation because highly concentrated markets often support stronger pricing power and brand premiums.

A valuation ratio comparing a company's share price to its earnings per share. The P/E ratio indicates how much investors are willing to pay for each pound of earnings and is influenced by growth expectations, risk profile, and the strength of intangible assets.

The AI Valuation Premium: How AI Capability Affects Company Value

AI-enabled companies trade at 25-40% higher multiples than peers, but not all AI capability is created equal. This article examines what drives the AI valuation premium, how to assess whether it is justified, and what happens when the premium unravels.

How do intangible assets interact with valuation multiples?

Companies with strong intangible assets (brands, IP, data moats) tend to command higher valuation multiples than commodity businesses, because buyers pay more for durable, defensible earnings.

What is a multiple (EV/Revenue, EV/EBITDA) and how do I choose the right one?

Multiples are shortcuts: Enterprise Value / Revenue (EV/Revenue) for growth-stage, EV/EBITDA for profitable companies, EV/Users for early-stage. Choose based on whether your business is profitable.

How do intangible assets affect company valuation multiples?

Companies with strong intangible assets command higher EV/Revenue and EV/EBITDA multiples because intangibles drive sustainable margins, competitive moats, and scalable growth.