What a buyer pays
Operating earnings, priced as a whole company.
EV/EBITDA is what an acquirer of the entire business pays for its operating earnings. It is used instead of P/E because it is indifferent to how the company is financed — debt and cash are already in the numerator. The screen adds conservative leverage and a share count that is not growing.
Educational research tooling, not investment advice. A screen is a filter over public data, not a recommendation.
What the Acquirer's Multiple screen tests
What a buyer of the whole company pays for its operating earnings. EV/EBITDA is used rather than P/E because it is indifferent to how the business is financed.
The rules, one by one
Every rule below is applied on every scan and reported with the value it was tested against, pass or fail. Each threshold is yours to change.
- EV / EBITDA
- The acquirer's multiple: what the whole business costs relative to its operating earnings. Must be positive — a negative multiple means EBITDA is negative, not that the company is cheap.
- Debt / Equity
- Total debt over shareholders' equity. Lenders rank ahead of you, so leverage can consume the discount before it closes. Companies with negative equity are excluded rather than scored as unlevered.
- Dilution
- Change in share count year over year. Positive means new shares are transferring your claim to someone else; negative means buybacks. Based on annual filings, so it lags.
Who this screen is for
- Investors who think in terms of what the whole business is worth rather than what the equity slice earns.
- Anyone screening across capital structures, where P/E is not comparable.
- Asset-heavy businesses judged on EBITDA alone — depreciation is a real cost there, which is why the core screen also tests EV/EBIT.
- Investors looking for growth; a low acquirer's multiple is usually attached to a flat business.
Acquirer's Multiple FAQ
Why must EV/EBITDA be positive?
A negative multiple means EBITDA is negative, not that the company is cheap. The screen tests for a positive value first so loss-makers cannot slip through on the sign.
Is EBITDA not a misleading measure?
For anything with factories, fleets or stores, yes — it flatters exactly the asset-heavy businesses deep value keeps finding. That is why the Core Deep Value screen tests EV/EBIT alongside it.
Why does every screen test dilution?
A discount that closes while the share count grows is a discount someone else collected. Dilution is measured from annual filings as the year-over-year change in shares outstanding, so it lags — a company that issued stock last quarter can still pass.
Other screens
NCAV
Net current asset value is current assets minus every liability. When it exceeds the market cap, the market is handing you the working capital and charging nothing for the business attached to it. The liquidity and leverage rules exist so that discount survives long enough to close.
Negative EV
Enterprise value is market cap plus debt minus cash. Below zero, the cash net of debt exceeds what the shares cost — you are paid to take the operating company. The price/sales and liquidity rules are there to make sure there is a business attached and that the cash is genuinely available.
Simple Way
Profitable, cheap on earnings and on book, funded mostly by equity rather than creditors, and yielding above the market. The dividend is the point: a slow re-rating is far easier to sit through when the position pays you for the wait.
Five scans, no card.
Run Acquirer's Multiple over the universe you choose, open any company, and read the rules it passed and the ones it did not.
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