The enterprise value-to-EBITDA multiples vary widely
acrossthesefirms,andmanyofthesefirmshavenegativenet
capitalexpenditures,partlyreflectingtheindustry’smaturity
andpartlythelumpynatureofreinvestments.Someofthese
firms also pay no taxes because they lose money. We
regressedtheEV/EBITDAmultipleagainstthetaxrateand
depreciation and amortization (DA) as a percent of EBITDA.
We did not use expected growth or cost of capital as
independentvariables because theyare very similar across
these firms. Using this regression, the predicted
value-to-EBITDA multiple for Birmingham Steel would be: