The DCF with multiple assumes the terminal value of a startup will be the realized amount of its exit, occurring at the end of the projected period. This way, fewer additional assumptions are needed on the future course of the company beyond the forecasted years.
The terminal value is computed with an industry-based EBITDA multiple discounted by the country-specific survival rate in the last projected year. It is calculated according to following formula:
Since the assumption is that the company will exit, the result is equivalent to an additional cash flow to the shareholders in the last forecasted year.