When valuing a vending machine business, which situation leads to a higher EV/EBITDA multiple?

Leasing the machines typically leads to a higher EV/EBITDA multiple because it keeps the balance sheet lighter. When a business leases its equipment, it generally does not capitalize the related assets and liabilities on its balance sheet, which can result in a lower level of reported debt. This can make the company appear more attractive to investors, as they might perceive it as having lower financial risk. Furthermore, lease payments are often treated as operating expenses, which do not impact EBITDA. Hence, a higher EBITDA relative to enterprise value may be calculated, resulting in a higher EV/EBITDA multiple.

In contrast, owning vending machines means that the business would reflect the machines as assets on the balance sheet, increasing both total assets and total liabilities (via associated depreciation and interest costs if financed). This can result in a lower EV/EBITDA multiple due to the higher fixed costs associated with ownership. Ignoring depreciation or lease costs could distort the EBITDA figure, but would not result in a fundamentally higher multiple based on the business's operating model.