2. Your firm is considering the purchase of 60% of a public firm, WinterCo, that has EBITDA of $1,000,000. Your small position in an identical private firm has a value of 5X EBITDA. What is the most you can pay for WinterCo? Market Transaction Multiple 6X Liquidity Discount 25% Peer Multiple 5X Control Premium 40% Industry Multiple 5.5X

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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2. Your firm is considering the purchase of 60% of a public firm, WinterCo, that has EBITDA of
$1,000,000. Your small position in an identical private firm has a value of 5X EBITDA. What is
the most you can pay for WinterCo?
Market Transaction Multiple 6X
Liquidity Discount 25%
Peer Multiple 5X
Control Premium 40%
Industry Multiple 5.5X
Transcribed Image Text:2. Your firm is considering the purchase of 60% of a public firm, WinterCo, that has EBITDA of $1,000,000. Your small position in an identical private firm has a value of 5X EBITDA. What is the most you can pay for WinterCo? Market Transaction Multiple 6X Liquidity Discount 25% Peer Multiple 5X Control Premium 40% Industry Multiple 5.5X
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