The Multiple Method is an optional feature on the Equidam platform that allows users to generate a valuation based on a company’s most recent financial performance, using market-based multiples. It’s designed to offer a fast and practical solution for situations where complete financial projections aren’t available, or where a traditional business model makes future performance easier to estimate based on current results.
This article will walk you through how the method works, when it’s appropriate to use, and how you can enable it on the platform.
What is the Multiple Method?
At its core, the Multiple Method is a simplified valuation approach that estimates a company’s worth by applying a market-derived multiple to a recent financial figure—either revenue or EBITDA. It’s widely used in the investment world, particularly for established businesses, because it’s fast and based on tangible, observed market behavior.
Where Equidam’s standard five-method valuation framework includes both forward-looking and qualitative components, the Multiple Method strips the process back to fundamentals: no projections, no discount rates, no survival probabilities—just a clear view of what the company is doing now and how the market typically values similar businesses.
When to Use the Multiple Method
This method is especially helpful in a few key situations.
First, it’s ideal when you’re assessing companies with limited data—for instance, during the early stages of investor screening when forecasts and detailed financial plans might not be available. It’s also useful for comparing companies within the same industry, where applying the same type of multiple across several businesses allows for a consistent baseline of comparison.
The Multiple Method is particularly suited for traditional businesses with predictable operations and relatively stable revenues—such as service businesses (e.g., HVAC services, salons, small manufacturers). These companies often don’t rely heavily on intangible value drivers like network effects or advanced intellectual property, so valuing them based on present-day financials makes more sense than trying to forecast hypergrowth.
While this approach doesn’t replace deeper valuation analysis, it provides a useful, grounded perspective and a fast way to make initial comparisons or sanity checks.
How the Multiple Method Works
To perform a valuation using the Multiple Method, the platform follows a straightforward, three-step process:
1. Financial Input
By default, the calculation uses your past year EBITDA performance. This is Derived from the data you have entered in the Financials tab of the platform.
2. Multiple Application
By default, Equidam automatically applies an industry-specific multiple to the past year EBITDA. These multiples are derived from a dataset of over 30,000 public companies and are updated regularly. (More on using a custom multiple below)
3. Valuation Output
The valuation is calculated using this simple formula:
Valuation = Financial Metric × Industry Multiple
For example:
If your company reported €500,000 in EBITDA, and the industry multiple for EBITDA is 6.2, then:
Valuation = €500,000 × 6.2 = €3.1 millionOr, if you use revenue instead and reported €1.2 million, with a revenue multiple of 2.8, then:
Valuation = €1.2 million × 2.8 = €3.36 million
The final result is a market-based valuation grounded in present-day performance and current industry norms.
Customizing the Multiple Method
By default, Equidam handles the multiple selection automatically. However, if you’d like more control, you can head to the Advanced Settings in your valuation dashboard.
From there, you can choose to:
Use Equidam’s Advanced Multiples Dashboard, where you can build your own comparable sets using public company data and decide whether to apply average or median multiples.
Manually enter a multiple if you have specific insight or access to private market data. (Note that we typically advise against this unless you have reliable benchmarks, as private market data can be inconsistent.)
Why the Multiple Method Is Optional
While helpful in the right context, the Multiple Method isn’t intended to replace Equidam’s full valuation framework. For startups in particular—where value is driven by potential more than current performance—this method can be misleading if used in isolation. Multiples are also subject to market sentiment and tend to oversimplify, often ignoring important qualitative aspects like team strength, product differentiation, and scalability.
That’s why the Multiple Method is not enabled by default. It’s a tool best used selectively—when data is limited, decisions need to be made quickly, or you’re analyzing a more traditional, low-variance business.
Enabling the Multiple Method on Equidam
To activate the Multiple Method in your valuation process:
Navigate to your valuation dashboard
Click on “Advanced Settings”
Find and enable the option for “Multiple Method”
Select your preferred metric (EBITDA or revenue)
Review and adjust the applied multiple if desired
Once enabled, the Multiple Method will appear alongside your other valuation results, giving you an additional lens through which to view the company’s value.
Need Assistance?
If you’re unsure whether the Multiple Method is right for your situation or would like help selecting the most appropriate multiple, feel free to reach out to our support team. We’re always happy to help you navigate the options and make the most of the tools available on Equidam.