Which of the following industries would more likely be analyzed using EV/EBITDA multiples?

The use of EV/EBITDA multiples is particularly relevant for industries where companies typically have significant capital expenditures and investments in tangible assets, as well as a focus on earnings before interest, taxes, depreciation, and amortization. High-tech internet companies often fit this profile due to their rapid growth potential and the significant impact of growth on valuation.

High-tech internet firms generally experience fluctuating cash flows and may not have stable net income due to high levels of investment in technology and customer acquisition. This makes EBITDA a more reliable metric for assessing operational performance, as it provides a clearer picture of profitability by excluding non-operational expenses and factors like interest and taxes, which can vary widely among companies.

Using EV (Enterprise Value), which accounts for both debt and equity, alongside EBITDA allows for a comparison of these high-growth companies on a level playing field, irrespective of their capital structure and tax rates. This is particularly useful in the high-tech sector, where companies may have different stages of growth and varying levels of debt.

Thus, the preference for EV/EBITDA multiples in the analysis of high-tech internet companies stems from their unique financial dynamics, positioning this metric as a favored choice for evaluating their worth.