Classic investor frameworks · Screening and validation
Tobias Carlisle · Acquirer's Multiple
Divides enterprise value by normalized operating earnings to screen for inexpensive businesses from an acquirer's perspective.
- Guide level
- Practical
- Output
- Screening and validation
Core formula
Acquirer's Multiple = enterprise value / normalized operating earningsHow to interpret it
Divides enterprise value by normalized operating earnings to screen for inexpensive businesses from an acquirer's perspective.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
Normalization, cyclicality and off-balance-sheet claims can make apparently cheap companies expensive.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.