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Industry Specific Multiples

Over the years, valuation experts have distinguished patterns in the selling price of businesses and financial ration of relevant groups. These patterns, industry specific multiples, determine the current value of a company. Industry specific multiples are the techniques that demonstrate what business is worth. To evaluate the estimate of the value of the business one can use financial ratios such as:

  • Enterprise value (EV) to gross revenues or net sales
  • EV to net income
  • EV to EBIT and EBITDA (earnings before interest, taxes, depreciation, and amortization)
  • EV to seller’s discretionary cash flow
  • EV to total business assets
  • EV to owners’ equity.

One can use different combinations of these financial performances to calculate the estimate of the firms’ value for different industries. (See Table 1) For instance, EV/revenue multiple is used to evaluate value of various new industries. While EV/EBITDAR multiple is used when there are significant rental and lease expenses incurred by business operations.

Table 1 shows typical multiples used in firm valuation within an industry. Table 2 shows Enterprise Value multiples by industry.

Table 1

Selected Industry-Specific Multiples

Multiple Sector Comments
EV/Revenue Various Early stage companies
EV/Subscriber Various Subscriber based businesses, such as Cable and Direct To Home (DTH)
EV/EBITDA Various Many Industrial and Consumer industries, but not Banks, Insurance, Oil & Gas and Real Estate
EV/EBITA Various Commonly used in several Media industry sub-sectors, Gaming, Chemicals and Bus & Rail Industries.
Used when EBITDA multiples are less relevant due to significant differences in asset financing (e.g. mix of leases, rentals, ownership)
EV/EBITDAX Oil & Gas Excludes exploration expenses
EV/EBITDAR Retail, Airlines Used when there are significant rental and lease expenses incurred by business operations
EV/Reserves Oil & Gas Used when looking at Oil & Gas fields and companies heavily involved in upstream.
Gives an indication of how much the field is worth on a per barrel basis
EV/Production Oil & Gas And Airports For producing fields, gives value on a barrel per day production basis
For container ports, gives value per ton of cargo handled
For airports, gives value per passenger through airports
EV/Capacity Oil & Gas For refiners, gives a value metric in terms of barrel per day of refining capacity
Market Cap/Book Value (“P/BV”) Technology/ Banks/ Insurance Used for Semiconductor industry. Book value of equity is used since there can be significant earnings fluctuation in this sector
Bank’s shareholders equity is important because it is looked at as a buffer/protection for depositors
EV/FFO Real Estate Principally used in the US
P/E Various Often using normalized cash earnings, excluding both exceptional items and goodwill amortization
PEG ratio High Tech, High Growth Big differences in growth across companies
(EV/EBITDA)/EBITDACAGR High Growth Used in Specialty Retail industry and when valuing emerging markets
IPO candidates


Table 2 (this data is as of January 2014)

Enterprise ValuesMultiples by Industry

Industry Name Number of firms EV/EBITDA EV/EBIT EV/EBIT (1-t)
Advertising 65 11.83 13.04 17.19
Aerospace/Defense 95 11.23 13.37 19.26
Air Transport 25 9.64 14.68 16.94
Apparel 70 14.12 16.03 21.31
Auto & Truck 26 11.72 24.07 30.59
Auto Parts 75 8.21 10.96 14.37
Bank 7 NA NA NA
Banks (Regional) 721 NA NA 0.00
Beverage 47 13.95 16.89 21.82
Beverage (Alcoholic) 19 18.78 22.75 29.01
Biotechnology 349 22.87 49.96 73.29
Broadcasting 30 13.55 15.53 19.89
Brokerage & Investment Banking 49 9.48 3.82 5.25
Building Materials 37 14.47 19.68 27.37
Business & Consumer Services 179 12.52 16.55 25.12
Cable TV 16 9.01 14.27 21.05
Chemical (Basic) 47 9.58 14.64 21.59
Chemical (Diversified) 10 10.87 15.73 21.93
Chemical (Specialty) 100 10.82 13.30 17.80
Coal & Related Energy 45 9.28 43.19 52.41
Computer Services 129 9.51 11.06 14.43
Computer Software 273 12.67 15.09 18.91
Computers/Peripherals 66 8.61 10.65 14.20
Construction 18 20.69 47.51 59.68
Diversified 20 19.82 28.21 34.14
Educational Services 40 8.45 14.97 23.28
Electrical Equipment 135 12.24 15.17 22.23
Electronics 191 11.85 19.55 24.43
Electronics (Consumer & Office) 26 8.95 13.06 16.11
Engineering 56 9.65 11.36 16.48
Entertainment 85 12.61 15.10 21.41
Environmental & Waste Services 108 10.79 17.17 25.62
Farming/Agriculture 29 11.49 15.84 24.04
Financial Svcs. 76 13.67 15.14 23.25
Financial Svcs. (Non-bank & Insurance) 17 35.29 4.18 5.18
Food Processing 97 12.26 14.63 19.70
Food Wholesalers 18 10.73 12.96 20.40
Furn/Home Furnishings 36 11.25 14.87 17.81
Healthcare Equipment 193 10.64 13.58 16.02
Healthcare Facilities 47 9.15 13.14 17.58
Healthcare Products 58 15.42 27.54 32.77
Healthcare Services 126 9.36 11.12 17.07
Heathcare Information and Technology 125 17.65 26.27 31.99
Heavy Construction 46 10.48 13.75 19.91
Homebuilding 32 18.06 18.72 22.54
Hotel/Gaming 89 14.18 22.08 26.63
Household Products 139 12.54 15.03 20.84
Information Services 71 15.21 17.47 25.03
Insurance (General) 26 9.00 11.94 14.18
Insurance (Life) 27 14.35 15.21 18.89
Insurance (Prop/Cas.) 53 8.97 8.77 11.80
Internet software and services 330 22.80 33.63 43.49
Investment Co. 65 10.06 13.17 19.39
Machinery 141 12.03 14.84 19.85
Metals & Mining 134 8.75 13.94 21.06
Office Equipment & Services 30 10.06 12.73 18.95
Oil/Gas (Integrated) 8 6.53 9.39 15.81
Oil/Gas (Production and Exploration) 411 12.98 NA NA
Oil/Gas Distribution 80 15.54 22.86 25.19
Oilfield Svcs/Equip. 163 8.63 11.21 15.57
Packaging & Container 24 9.12 12.86 17.04
Paper/Forest Products 21 9.70 15.67 18.27
Pharma & Drugs 138 11.54 15.60 19.92
Power 106 9.78 16.85 23.70
Precious Metals 166 5.37 16.69 18.50
Publshing & Newspapers 52 10.18 16.34 22.06
R.E.I.T. 46 7.41 23.81 23.77
Railroad 10 9.88 12.42 19.47
Real Estate (Development) 22 31.56 111.69 133.40
Real Estate (General/Diversified) 11 56.83 130.42 169.56
Real Estate (Operations & Services) 47 16.13 22.98 29.02
Recreation 70 11.75 15.99 20.32
Reinsurance 3 8.81 12.32 16.13
Restaurant 84 14.55 20.38 27.69
Retail (Automotive) 30 12.98 16.82 27.05
Retail (Building Supply) 7 12.11 16.33 25.83
Retail (Distributors) 87 13.15 14.26 21.17
Retail (General) 21 9.12 13.61 20.98
Retail (Grocery and Food) 21 10.08 22.34 32.43
Retail (Internet) 47 42.14 78.72 101.86
Retail (Special Lines) 137 11.94 16.17 25.35
Rubber& Tires 4 5.14 7.15 10.23
Semiconductor 104 10.24 17.20 21.07
Semiconductor Equip 51 14.09 31.59 42.39
Shipbuilding & Marine 14 13.04 21.01 34.18
Shoe 14 16.51 18.90 25.16
Steel 37 10.32 18.06 23.23
Telecom (Wireless) 28 14.62 NA NA
Telecom. Equipment 131 11.65 14.63 17.30
Telecom. Services 82 7.42 15.81 18.47
Thrift 223 11.20 NA NA
Tobacco 12 10.85 11.30 16.55
Transportation 22 15.35 24.08 36.00
Trucking 28 10.91 13.63 23.01
Utility (General) 20 9.38 15.02 21.50
Utility (Water) 20 10.90 16.07 23.70
Total Market 7766 11.45 17.93 24.15