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Very young, fast-growing companies will often have negative EBIDTA, in part because they are growing so quickly. When this is the case, using a multiple of EBID
by lauradhamilton 13y ago
Very young, fast-growing companies will often have negative EBIDTA, in part because they are growing so quickly. When this is the case, using a multiple of EBIDTA does not really make sense.
For an older company that is not growing or is growing slowly, an EBIDTA multiple makes more sense.
- mbesto 13y agoMakes sense. But for a company that is on the brink of IPO (or recently IPO'd) doesn't this mean they are no longer young or fast-growing, but rather steady, matured and more predictable? (hence opening up to a larger, more public and less sophisticated set of investors)
- mattzito 13y agoSome are - some are still very much in growth mode, or on track to be acquired by a larger player for strategic value, both of which can screw with the multiple.