Can anyone help me solve this...
Q.3 A firm has reached an agreement with target acquisition to use a comparable firms EBITDA multiple in
determining the targets multiple. The comparable firm has similar profitability measures but differing growth
rates and cost of capital.
Comparable
Firm
Mebitda 18
WACC 15%
Growth 8%
Target Firm
WACC 18%
Growth 6%
Given the Comparable Firm’s and the Target’s financial data in the Table estimate the Mebitda ( EBITDA Multiple
for the Target firm )
Thanks in advance.............

Question

owlfred · Answer

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anonymous · Answer

no sorry

anonymous · Answer

you need to run a regression where u use as independent variables, tax,depreciation,reinvestment rate,growth and beta(systematic risk). the dependent should be Enterprise value/EBITDA . When u obtain the regression coefficients plug those numbers that belong to your firm to get the target EV/EBITDA ratio.