Analysis of various prices helps you determine the premium that should be paid in a deal Let's look at the first line of figures We've got a 0% premium being paid, which gives a share price of 10 (Which is the current share price of the company) Times that by the shares outstanding gives the current market cap of the company We can then convert that to an enterprise value by adding the debt of 100, subtracting cash of 50 to get to EV of 1,050 We can then divide that by the last 12 months EBITDA to come up with an EV last 12 months multiple And at the moment that's 8.8 We can compare that to trading comps and we can see if this company is broadly average or medium or representative of the industry Let's assume it is, let's assume it's not a crazy outlier What we can then do is use various different prices We could have a premium of 20%, 25%, 30%, 35%, 45% for instance Those premiums imply the share prices So let's have a look, a premium of 20% implies a share price of 12 If we then go all the way to the right hand side, that then implies an EV to last 12 months EBITDA multiple of 10.4 What we can now do is compare these various multiplies to those found in transaction comps Let's say I look in transaction comps and I find the median multiple that has occurred in this industry is 11.7 That's really interesting! I look at my table, I find a figure that's 11.7 or close And I can see that implies a premium paid for this company of 35% That's hugely useful, you're going into negotiation and you can show that you should be paying 35%