How much of a private equity return is driven by changes in EBITDA (assuming an EBITDA-based valuation).
Module Category: P&L and Operational Drivers
Key Concept: Company total enterprise value (TEV) can be expressed as the product of its trailing-twelve-month EBITDA (E) and an EBITDA valuation multiple (M). This allows analysts to break the Unlevered Return (see Module 03) into EBITDA Growth and EBITDA Multiple Expansion.