Two companies have the exact same financial profiles and are bought by the same acquirer, but the EBITDA multiple for one transaction is twice the multiple of the other transaction - how could this happen?

• A. One process was more competitive and had more bidders
• B. One company had recent bad news or a depressed stock price
• C. They were in industries with different median multiples
• D. All of the above

Answer: (D)

Multiples reflect more than just the operating numbers; they capture deal dynamics, market sentiment, and industry norms. If two deals have the same EBITDA, a higher multiple can come from a highly competitive sale process where many bidders drive up price and value, creating a bidding war that lifts the enterprise value relative to EBITDA. Conversely, if one target has recent bad news or a depressed stock price, buyers may view it as riskier or less attractive, which can compress the valuation and produce a lower multiple even with similar earnings. Finally, industry context matters: different sectors carry different typical multiples due to growth prospects, risk, and capital requirements. A target in a high-multiple industry will naturally command a higher multiple than one in a lower-multiple industry, all else equal. Because any of these factors can independently or collectively influence how much a buyer is willing to pay, it’s entirely plausible for the same acquirer to see significantly different EBITDA multiples across deals.