Calculating Multiples

Spreading transaction comps is identical to trading comparables for the most part.

EV = Market Cap + Net Debt + Non Controlling Interest – Investment in Associates – Investment in Affiliates

But there are some differences that are worth noting:

Market Cap: In trading comparables, market cap is calculated by multiplying share price and fully diluted shares outstanding. In transaction comparables, share price is replaced by the offer price while calculating market cap.

Fully Diluted Shares: In trading comparables, only options that are exercisable are taken into account when calculating fully diluted shares outstanding. When spreading transaction comparables, all options outstanding are taken into account as there is a change of control.

Synergies: Any reported synergies reduce the overall cost of acquisition for the buyer and must be subtracted while calculating EV.