Valuation Multiple

A valuation ratio comparing a company's enterprise value to its annual revenue. EV/Revenue is often used to value high-growth or pre-profit companies where earnings-based multiples are not meaningful.

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.

The process of estimating the economic value of a company's active user community, considering metrics such as engagement levels, conversion rates, lifetime value, and network effects. User base valuation is central to the assessment of platform businesses and social media companies, where the user community itself is the primary intangible asset.

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.

The valuation of a company immediately after a new funding round, calculated as the pre-money valuation plus the capital raised. Post-money valuation determines the ownership percentage that new investors receive for their investment.

The valuation of a company immediately before a new funding round. Pre-money valuation is negotiated between the company and investors and, combined with the amount raised, determines how much equity is issued to new shareholders.

How do intangible assets interact with valuation multiples?

Companies with strong intangible assets (brands, IP, data moats) command higher valuation multiples—e.g., 8-10x revenue versus 2-3x for commodity businesses.

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.

What is the link between intangible assets and EBITDA?

Companies with strong intangible assets typically generate higher EBITDA margins because intangibles scale without proportional cost increases — driving higher revenue per employee and lower marginal costs.