PEINVEST
A valuation method that estimates the present value of an investment based on its expected future cash flows, discounted at an appropriate rate. DCF analysis is a fundamental tool in PE for assessing the intrinsic value of potential acquisition targets.
The total value of a company, calculated as market capitalization plus net debt minus cash. Enterprise value represents the theoretical takeover price and is the basis for EV/EBITDA multiples commonly used in PE deal pricing.
Earnings Before Interest, Taxes, Depreciation, and Amortization—a widely used proxy for operating cash flow in PE valuations. EBITDA multiples are the most common valuation metric for buyout transactions, allowing comparison across companies with different capital structures.
The annualized rate of return that equates the present value of all cash inflows with the present value of all cash outflows in an investment. IRR is the most widely used return metric in PE and accounts for the timing and magnitude of cash flows.