Separate the market and manager-driven factors behind valuation to calculate Market Multiple Expansion and Intrinsic Multiple Expansion.
Module Category: Market or Sector Drivers
Key Concept: In companies with either EBITDA-based or revenue-based enterprise valuations, valuation multiples (Ms) can be expressed as the product of market valuation multiple (MM) and a relative discount or premium to the market valuation (μ). This allows analysts to break Multiple Expansion (see Module 04 and Module 05) into Market Multiple Expansion and Intrinsic Multiple Expansion.