Rule of Thumb for Private Equity Valuations and Buyouts
Private equity buyout valuations have historically averaged about 4 to 5 times EBITDA. In recent years (2005 and beyond), private equity buyout valuations have been closer to 10x EBITDA. Insiders agree that this will limit Private Equity (PE) returns to mid- to low teens in sharp contrast to their historical 30% IRRs.
Tags: 10x, EBITDA, Growth, Private Equity, Rule of Thumb, Valuation