Most people find the terminal value by using the EV/EBITDA exit multiple through multiplying the financial metrics such as EBIT and EBITDA by a factor that is similar to that of recently acquired companies.
This refers to the value of an asset, business or project beyond the forecasted period when future cash flows can be estimated.
When using the Exit Multiple, the Terminal Value (value of the business) is obtained by multiplying financial metrics such as EBITDA or EBIT by a factor obtained from comparable companies that were recently acquired.
Hence, we can find the terminal value by using the EV/EBITDA exit multiple through multiplying the financial metrics such as EBIT and EBITDA by a factor that is similar to that of recently acquired companies.
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