Independent reference. No email capture, no upsell, no demo. Not affiliated with any data provider mentioned.
Terminal Value CalculatorDCF / Gordon Growth / Exit Multiple
Method / Exit Multiple

Exit Multiple Method: market-anchored terminal value

The exit multiple method values a business at the end of the forecast horizon by applying a market multiple, usually EV / EBITDA, to the terminal-year metric. It is the default terminal-value method in M&A and LBO modelling because it anchors to observable transaction or trading data rather than macro assumptions.

Direct answer
Terminal value under the exit multiple method equals the terminal-year EBITDA multiplied by an exit EV/EBITDA multiple chosen from comparable companies or precedent transactions. The result is then discounted to today using (1 + WACC) raised to the power n. The discipline is to back-solve the implied perpetuity growth rate and sanity-check it against macro assumptions.
Exit multiple terminal value
TVn = EBITDAn * (EV / EBITDA)exit
Present value: PV(TV) = TVn / (1 + WACC)n
Source: Koller, Goedhart, Wessels, Valuation, 7th ed., Ch. 11; Rosenbaum and Pearl, Investment Banking, 3rd ed., Ch. 5 (precedent transactions, M&A premium)Last verified June 2026.
Multiple selection

Where to source the exit multiple

Three sources in order of relevance for most M&A models.

Precedent transactions

EV / EBITDA paid in completed M&A deals for comparable targets. Reflects control premium plus synergy expectations. Best for an LBO or strategic-acquisition DCF.

Source: Rosenbaum and Pearl, Investment Banking, 3rd ed., Ch. 5
Public trading comps

Current EV / EBITDA at comparable listed peers. Embeds today's growth expectations and risk premium. Best for a standalone-equity DCF where no transaction is contemplated.

Source: Damodaran data, EV/EBITDA by industry (Jan 2026)
Damodaran industry medians

Cross-sectional industry medians published annually by NYU Stern. Useful when peer-level data is thin or you need an industry benchmark to sanity-check the comp set.

Source: Damodaran, EV / EBITDA Multiples by Industry, Jan 2026 update
Discipline

Always back-solve the implied perpetuity growth

A 12x exit multiple looks innocuous. The Gordon Growth identity tells you what it actually implies about long-run growth.

Back-solving g
Given TV = EBITDAn * exit-multiple and TV = FCFn * (1 + g) / (WACC - g), solve for g:
g = (TV * WACC - FCFn) / (TV + FCFn)
If the implied g exceeds 3 to 4 percent, the multiple is pricing in permanent above-GDP growth. Either the comp set is wrong or the multiple needs to come down.
Source: Editorial derivation from Damodaran's Gordon Growth identity (Investment Valuation, 3rd ed., Ch. 12)Last verified June 2026.
Comp-set hygiene

Four checks before you trust an exit multiple

  1. 1Strip out outliers. Single high-growth comps inflate the median. Use trimmed mean or interquartile-range median rather than raw average.
  2. 2Match growth and margin. A 20% growth comp set is not a defensible exit multiple for a 5% growth target. Use a regression of multiple on growth + margin if the dispersion is wide.
  3. 3Match capital structure. EV / EBITDA is capital-structure-neutral, but peer betas and operating leverage should still resemble the target.
  4. 4Date-match the data pull. Multiples drift quarter to quarter with the broader market. Note the data-pull date on the page footer so future users know what regime the multiple came from.

Compute the implied perpetuity growth live

The calculator solves for implied g whenever you adjust the exit multiple, so you can spot when a comp-set multiple is quietly pricing in above-GDP perpetuity growth.

Open the calculator