What You Should Know About the EBITDA Multiple Formula

As overwhelming as it may seem to beginners — most especially — using the EBITDA Multiple formula proves to be incredibly helpful for any business. In this article, we’ve handpicked crucial information entrepreneurs must know about EBITDA, how to utilise it and make it work in your favour.

How can knowing your EBITDA Multiple help to secure investment in your business?

All investors want to know how much money they’ll make if they back you — that’s where the EBIDTA Multiple becomes a powerful tool.

In the early stages of a business, where there isn’t much hard data yet, tools like the EBITDA Multiple can help forecast your potential trajectory.

Investors want reassurance that they’ll receive a healthy return on the day-of-exit when your company is sold.

Even though your EBITDA Multiple won’t be a cast-iron guarantee of what your company will be worth when the time comes to exit, it will:

• Show your potential investor the current exit potential of businesses in your niche/sector.
• Demonstrate that you are financially literate, have a financial vision, and understand the end game you and your investor want to achieve. (In other words, you’re the…