What's The Flaw With Basing Terminal Multiples On What Public Company

1.	What's The Flaw With Basing Terminal Multiples On What Public Company Comparables Are Trading At?
Answer» The median multiples may change GREATLY in the next 5-10 YEARS so it may no LONGER be accurate by the end of the period you're looking at. This is why you normally look at a wide range of multiples and do a sensitivity to see how the valuation CHANGES over that range. This method is particularly PROBLEMATIC with cyclical industries (e.g. semiconductors). The median multiples may change greatly in the next 5-10 years so it may no longer be accurate by the end of the period you're looking at. This is why you normally look at a wide range of multiples and do a sensitivity to see how the valuation changes over that range. This method is particularly problematic with cyclical industries (e.g. semiconductors).

What's The Flaw With Basing Terminal Multiples On What Public Company Comparables Are Trading At?

Answer»

The median multiples may change GREATLY in the next 5-10 YEARS so it may no LONGER be accurate by the end of the period you're looking at. This is why you normally look at a wide range of multiples and do a sensitivity to see how the valuation CHANGES over that range.

This method is particularly PROBLEMATIC with cyclical industries (e.g. semiconductors).

The median multiples may change greatly in the next 5-10 years so it may no longer be accurate by the end of the period you're looking at. This is why you normally look at a wide range of multiples and do a sensitivity to see how the valuation changes over that range.

This method is particularly problematic with cyclical industries (e.g. semiconductors).

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