Exit Multiple
An exit multiple is the valuation multiple used to estimate the value received when an investment is sold or liquidated, commonly expressed as a multiple of a financial metric such as enterprise value to EBITDA (EV/EBITDA) or EV/Revenue.
Example: An investment model uses an expected exit multiple of 7x EV/EBITDA to estimate the exit enterprise value when the investment is planned to unwind in year five. The corresponding equity value is obtained after adjusting for net debt.
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