M&A GLOSSARY
Multiple
Valuation Multiple
A ratio comparing business value with a financial metric.
What does Multiple mean?
A ratio comparing business value with a financial metric. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Multiple in context
A company valued at $5 million with $1 million EBITDA trades at 5x EBITDA.
Why it matters in financing
Multiple can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related m&a terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.