Purchase Multiple (PM)
See for general discussion.
The words Purchase Price, Price, Enterprise Value, Business Value and Market Value of Invested Capital are used interchangeably in BVX.
Quick Tips:1. Deal Optimizer™ automatically calculates EBITDA Purchase Multiple
2. Deal Quantifier™ requires manual entry of EBITDA Purchase Multiple
EBITDA Purchase Multiple is the Enterprise Value (V) divided by last year's EBITDA.
When user clicks Deal Optimizer™, the program automatically calculates the optimal Purchase Price Multiple. In addition to Purchase Price Multiple, Deal Optimizer™ simultaneously determines Buyer Equity, Gap (Seller) financing and Mezzanine Equity.
Deal Quantifier™ freezes existing data in the Purchase Price Multiple cell and updates all the financials.
Purchase Price Multiple is entered and/or displayed as a multiple of Year-0 EBITDA. Hence, Purchase Price equals Year-0 EBITDA times the Purchase Price Multiple.
No data entry is needed in this cell to calculate the business value.
When Deal Optimizer™ is clicked BVXoverrides any existing data in the Purchase Price Multiple cell and calculates and displays the maximum purchase price multiple based on BVX Best Value in the Purchase Price Multiple cell.
Purchase Price Multiple is restricted to be within 1.2 and 300 to speed up calculations and to stop the algorithm from getting out-of-bounds.
Click Deal Quantifier™to freeze purchase price multiple in the Purchase Price Multiple cell. Deal Quantifier™ does not activate the valuation algorithm; instead it instantly updates all the financial schedules. For more details see .
The Purchase Price Multiple cell is tinted green because it acts as a combination input and output cell. It is an output cell with Deal Optimizer™ and an input cell while using Deal Quantifier™.
"A" Button for EBITDA Purch. Multiple allows the user to enter the Enterprise Value as an "amount" rather than as a "multiple" of EBITDA. BVX then converts the Enterprise Value "amount" into EBITDA "multiple" by dividing it with Year-0 EBITDA. It then enters this calculated multiple into the data cell. This feature is useful when one wants to display and print reports with a rounded Enterprise Value like 1,500,000 rather than 1,495,758.