What type of multiples would you use for a company in the technology sector?

You would use common multiples such as P/E, EV / EBITDA and EV / Revenue.

For many technology companies that are still growing and not experiencing positive EBITDA or earnings, EV / revenue may be a more relevant multiple. Also, it may make sense to focus on a variety of forward multiples; it is common to look at metrics 2 or 3 years in the future.

For SaaS companies, free cash flow may be more relevant than revenue since cash is received upfront in purchases of upfront subscriptions. So P / FCF is a common multiple.

Free cash flow (FCF) is operating cash flow + investing cash flow, where investing cash flow is often a cash outflow as it includes capital expenditures (capex) and acquisitions.

For internet companies, you could use EV / # of Users or Subscribers and EV / # of Clicks as well.