EBITDA, EBITDA, EBITDA…That’s All, Folks!Alpha Architect
Value investing practitioners and academics have long studied the enterprise multiple effect, including my own business partners, Jack and Wes. The literature reveals that Enterprise Multiples, defined as total enterprise value of the firm divided by EBITDA, generate the largest spread between Value and Growth firms. The debate among academics is whether the enterprise multiple effect is attributed to mispricing or to higher systematic risk. That there is any debate at all suggests that investment bankers do not . . .
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