enterprise multiple

Also known as the enterprise-value-to-EBITDA ratio. A measure of company value, it compares a firm's enterprise value to its earnings before interest, taxes, depreciation and amortization (EBITDA). Generally speaking, the enterprise multiple relates a firm's takeover cost to its earnings potential. It serves as a rough proxy of how long it would take for an acquisition to earn enough to pay off its costs. Therefore, a company with a low multiple may be a potential takeover target.