You're correct, the difference is multiplying by gross revenue or by EBITDA. In Accounting firms, for example, it is common to have a multiple (often about 0.9) of Revenue, which is often 3-5 times EBITDA. A property management rent roll is another example where revenue is used, often 2.7 - 3.2 times depending on the market.
Most companies, however, are sold on EBITDA multiples. Unless the new business can rapidly be plugged into existing processes (like in accounting and property management), then the buyer wants to have a better idea of profit margins. EDITDA will give them that.
Most companies, however, are sold on EBITDA multiples. Unless the new business can rapidly be plugged into existing processes (like in accounting and property management), then the buyer wants to have a better idea of profit margins. EDITDA will give them that.