Definition for : Multiples method

The multiples method for valuing a company is based not on the Value of Operating assets and Liabilities per se, but on the overall returns they are expected to generate. The Value of a company is derived by applying a certain multiplier to the company's Profitability parameters. There are two multiples methods: based on Market multiples and based on Transaction multiples. Multiples method is also called the Peer comparison method.

(See Chapter 32 Capital structure and the theory of perfect capital markets of the Vernimmen)

To know more about it, look at what we have already written on this subject