Under this process, each company’s market value is to be converted into a standardized value that is relative to a key statistic. This is followed by utilizing standardized valuation multiples. The next step is to determine the market value for each company. The first step in conducting a multiples analysis is to identify companies or assets that have similar business structures or operations. What Are the Steps to Conduct a Multiples Analysis?
However, it is now being incorporated with the discounted cash flow analysis and other market-based methods in valuation.
Thus, the assumption is that the relative value of certain financial ratios can be used to rank or value a company within a similar group.ĭespite being the oldest technique in valuation, the multiples analysis is still used.
The multiples analysis is a valuation technique that utilizes different financial metrics from comparable companies to value a target company.
