Which metric is the most common value driver in transaction comps?

Which metric is the most common value driver in transaction comps?

• A. LTM EBITDA
• B. Forward EBITDA
• C. LTM Revenue
• D. EBIT

Answer: (A)

In transaction comps, you want a metric that cleanly reflects operating performance and is comparable across peers. EBITDA serves as a proxy for cash earnings from operations, removing financing effects and non-cash charges, and it’s widely reported and used in practice. Using last twelve months data (LTM) anchors the measure in recent performance, reducing distortions from seasonality or one-off items. Among the options, LTM EBITDA is the most common value driver because it provides a consistent, widely comparable basis for applying valuation multiples across peers. Forward EBITDA is used for forecasts, but not as the standard baseline in most comps; LTM revenue is less preferred as a primary driver when profitability and cost structure vary, and EBIT includes depreciation and amortization that can differ more across companies.

In transaction comps, you want a metric that cleanly reflects operating performance and is comparable across peers. EBITDA serves as a proxy for cash earnings from operations, removing financing effects and non-cash charges, and it’s widely reported and used in practice. Using last twelve months data (LTM) anchors the measure in recent performance, reducing distortions from seasonality or one-off items. Among the options, LTM EBITDA is the most common value driver because it provides a consistent, widely comparable basis for applying valuation multiples across peers. Forward EBITDA is used for forecasts, but not as the standard baseline in most comps; LTM revenue is less preferred as a primary driver when profitability and cost structure vary, and EBIT includes depreciation and amortization that can differ more across companies.