Background Note | HBS Case Collection | October 2005 (Revised January 2009)

Corporate Valuation and Market Multiples

by Timothy A. Luehrman

Abstract

Provides a basic introduction to the use of market multiples for business valuation. Explains the method's reliance on the Law of One Price, sets forth the basic steps for using the method, and reviews some practical issues arising in its application.

Keywords: Business Ventures; Price; Market Transactions; Mathematical Methods; Valuation;

Citation:

Luehrman, Timothy A. "Corporate Valuation and Market Multiples." Harvard Business School Background Note 206-039, October 2005. (Revised January 2009.)