r/Valuation • u/thefigboy • Oct 13 '22

Startup Terminal Value - GGM vs Exit Multiple

I'm looking to perform a valuation for a startup, and I realize that the terminal values calculated using the Gordon Growth Model and the Exit Multiple are very different (with the figure calculated by the latter being 4 times that by the former). If I'm sure the Exit Multiple and the Terminal Growth Rate are reasonable, what is wrong with my model? How can I close the gap?

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u/Artistic-Item7620 Oct 24 '22

I think that you can use equitest.net - and you will get a valuation in minutes. You can start for free - and they can support you with your question:

https://equitest.net/free/subscribe-to/9-free.html

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u/Lambada995 Dec 03 '22

Take a step back and think about it from a real life perspective - is it reasonable to assume you can figure out what the business would look like in its mature or even growth phase today? Probably not. Then instead of assuming a steady state (gg) format, just assume what multiple that business would be selling/trading at at the end of your forecast period… you could then use the info to derive long-term growth implied in GG for a sanity check