Economic Themes (2009) 47 (4) 14, 201-217
Bojan Milićević
Abstract: This research shows how to utilize multiples to yield proper estimates of a firm’s value. To identify the underlying drivers of different multiples, intrinsic multiples are derived from fundamental equity valuation models. An overview of the standard multiples valuation method and its criticism initiates an analysis of the four-step multiple valuation process. The key criteria for the selection of value relevant measures and for identification of comparable firms, so as strengths and weaknesses of this method are investigated.
Keywords: equity; methods; multiples; valuation
THE STANDARD MULTIPLES VALUATION METHOD AND ITS CRITICISM
Bojan Milićević
Abstract: This research shows how to utilize multiples to yield proper estimates of a firm’s value. To identify the underlying drivers of different multiples, intrinsic multiples are derived from fundamental equity valuation models. An overview of the standard multiples valuation method and its criticism initiates an analysis of the four-step multiple valuation process. The key criteria for the selection of value relevant measures and for identification of comparable firms, so as strengths and weaknesses of this method are investigated.
Keywords: equity; methods; multiples; valuation
