In calculating our multiples, there are steps that we have to follow Our first step is to choose the comparable companies or the company universe Not an easy thing to do this and everyone will come up with a different group of companies But we might choose certain criteria such as industry focus, company size, growth characteristics, cost structure etc Next up, we need to calculate values for each of these companyies. Things like enterprise value and equity value Thus we're going to spend a lot of time going up and over the EV bridge, making sure we've calculated each of those figures correctly We then to calculate value drivers. If I've got my EV, I need an EBIT to be the value driver of it or an EBITDA for instance Thus we'll spend a lot of time on our income statement and our forward income statement Remember any forward figures must be normalized. So any non-recurring items need to be taken out If I've now got my value and my value driver, we can calculate multiples and then do a sense check Make sure there are no outliers. I haven't got an EV/EBIT multiple of 2000 for instance With all of these multiples I've now got, we can produce valuation ranges So for instance, my EV/EBIT multiple might imply a share price of X My P/E multiple might give me a share price of Y. And we'll come up with a whole range of valuations to help us narrow down what we think an implied value for this company is