Alternative Investments Q85

85A private equity fund is considering purchasing a small software company. Similar software companies have sold 7 x EBITDA, 8 x EBITDA and 9 x EBITDA in the previous 3 months. The target company’s EBITDA is $100 million. Based on this information, the maximum value of the software company is:

Option : C
Explanation : The maximum value is simply EBITDA times the highest multiple: 100 million * 9 = 900 million

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