Terminal value is the estimated value of a business beyond the explicit forecast period. It is a critical part of the financial model, as it typically makes up a large percentage of the total value of a business.

May 20, 2025 · The multiples approach uses the approximate sales revenues of a company during the last year of a discounted cash flow model and then uses a multiple of that figure to arrive at the …

The terminal multiple is applied to the final year EBITDA (or EBIT) and is added to the cash flow of the final year. The cash flows are then all discounted at the discount rate (WACC) and gives the implied …

Apr 7, 2025 · The exit multiple approach applies a valuation multiple to a metric of the company to estimate its terminal value. In theory, the exit multiple serves as a useful point of reference for the …

The Terminal Multiple Method: This approach uses an appropriate multiple (e.g., EV/EBITDA) to estimate the terminal value based on market valuations at the end of the projection period.

Apr 6, 2025 · The terminal multiple method involves applying a multiple, often derived from comparable company analysis, to a financial metric such as EBITDA or net income in the final projected period.

Aug 17, 2022 · Calculate terminal value in a DCF with 10 methods, including Gordon growth, EBITDA, and ROIC models, for accurate valuation based on your assumptions.

You can use either method, or both methods, to estimate Terminal Value, but the important part is what comes next: once you have your initial estimate, you must cross-check it by entering the numbers in …

We explain and illustrate with an interactive model the use of forward-priced multiples in DCF. We also discuss the choice of multiple (including why EV/EBITDA may not be the best) and whether to apply …

Terminal Multiple Method is a way to calculate Terminal Value assuming the business sells itself to a buyer. It’s a key component of a DCF analysis.