A multiple is a benchmark instrument, not a valuation methodology. A business needs to be valued via DCF, using a multiple to value a business is a big mistake.
Let me clarify, e.g. An EBITDA multiple of 8x all it means is that the company's Enterprise Value is 8x the company's (either FY0 or preferably FY+1) EBITDA. But the important number here is not the multiple, it's the Enterprise Value! The multiple is the by-product of the valuation (Enterprise Value/EBITDA = Multiple), and not vice-versa. By using a multiple you are potentially omitting the company's future growth, capital structure, increase in profitability/margins, etc. That is why the smart way of valuing a business is via DCF. By using a DCF you are able to critically test if the operational metrics, implied growth, revenues, costs, profitability, etc assumptions are realistic and achievable. And in the case of a tech companies, one makes sure that growth (where a big chunk of value is) is factored/priced in.
As you said, I think DCF would be the right thing to do. we already did the valuation for this round of investment using DCF. so in future calculations of valuation, it would make sense to use DCF again.
The current draft of the Shareholders Agreement currently says that EBITDA should get used if there're revenues, but if there are no revenues, DCF should get used.
I think we will just amend that by removing EBITDA, and forcing the use of DCF in all cases.
Let me clarify, e.g. An EBITDA multiple of 8x all it means is that the company's Enterprise Value is 8x the company's (either FY0 or preferably FY+1) EBITDA. But the important number here is not the multiple, it's the Enterprise Value! The multiple is the by-product of the valuation (Enterprise Value/EBITDA = Multiple), and not vice-versa. By using a multiple you are potentially omitting the company's future growth, capital structure, increase in profitability/margins, etc. That is why the smart way of valuing a business is via DCF. By using a DCF you are able to critically test if the operational metrics, implied growth, revenues, costs, profitability, etc assumptions are realistic and achievable. And in the case of a tech companies, one makes sure that growth (where a big chunk of value is) is factored/priced in.