Resources / Glossary / LTM multiple

LTM multiple.

Aka. Trailing multiple · TTM multiple
All terms

What is an LTM multiple?

An LTM multiple is a valuation ratio struck against the last twelve months of a company's actual results. The numerator is almost always enterprise value; the denominator is a trailing financial metric — most often EBITDA, but it can be revenue, gross profit, or any other line. "LTM" and "TTM" (trailing twelve months) mean the same thing.

The defining feature is that the denominator is realized, not forecast. An LTM EBITDA multiple of 9.0x means the buyer paid nine times what the business actually earned over the trailing year. There is no growth assumption embedded in the metric — only in the price someone is willing to pay relative to it.

Practitioners reach for LTM multiples when they want a defensible, audit-able anchor. The trailing period has closed; the numbers can be tied to financial statements rather than to a management forecast that may or may not materialize.

How an LTM multiple is built

The mechanics are simple, but the period definition matters more than people expect.

  1. Fix the trailing window. LTM runs to the most recent reported period-end — not the fiscal year-end. If you are valuing in May and the company reports quarterly, LTM runs through the March quarter, not the prior December.
  2. Roll the financials. LTM EBITDA is computed as the last full fiscal year, plus the stub of the current year to date, minus the matching stub of the prior year. This "add the current stub, subtract the year-ago stub" roll is the standard construction.
  3. Apply the same adjustments consistently. If the denominator is adjusted EBITDA, the add-backs must be applied across the entire trailing window, not just the recent quarters.
  4. Divide. Enterprise value over the LTM metric gives the multiple. The same EV must be paired with a consistent metric — EV with EBITDA or revenue, equity value with net income.

LTM versus NTM

The counterpart to an LTM multiple is an NTM (next twelve months) multiple, struck on forward, forecast numbers. For a growing business, the NTM multiple is always lower than the LTM multiple at the same price — because the forward denominator is larger.

Neither is "correct." LTM is conservative and verifiable; NTM reflects what a buyer is actually underwriting. Sophisticated processes quote both, and the gap between them is itself a signal: a wide LTM-to-NTM spread tells you how much of the price rests on growth that hasn't happened yet.

Frequently asked.

5 questions
01 How is LTM EBITDA actually calculated?

Take the most recent full fiscal year's EBITDA, add the EBITDA from the current year-to-date stub, and subtract the EBITDA from the same stub a year earlier. That rolls the twelve-month window forward to the latest reported period-end.

The same add-backs and adjustments must be applied uniformly across all four quarters in the window, or the resulting multiple will not be comparable to anyone else's.

02 Why use an LTM multiple instead of a forward multiple?

Because the trailing period has closed and the numbers can be verified against reported financials. An LTM multiple carries no forecast risk — it tells you what was paid relative to results that actually happened.

The trade-off is that it ignores momentum. A fast-growing business looks expensive on LTM and reasonable on NTM, which is exactly why deal teams quote both.

03 Is LTM the same as TTM?

Yes. "Last twelve months" and "trailing twelve months" are interchangeable labels for the same rolling, most-recent twelve-month period. Different shops simply prefer different acronyms.

04 Does LTM mean the last fiscal year?

No — and conflating the two is a common error. LTM rolls to the most recent reported period-end, which is usually a quarter-end mid-year, not the fiscal year-end. Using the last completed fiscal year instead of a true rolling window can misstate the multiple by a full quarter of performance.

05 Where does the LTM build live after a deal closes?

In most deals the LTM roll lives in a working file on a banker's laptop, recomputed from scratch each time someone needs it. The underlying stubs, add-backs, and source statements scatter across the data room.

Keeping the LTM build linked to its source documents — so the trailing window and every add-back stay queryable against the closed deal record — is part of what VectorShift preserves after the room shuts down.

Related terms

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Bridge to equity value

The step-by-step adjustment from <em>enterprise value</em> to equity value — netting debt, cash, and every claim that ranks ahead of common shares.

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Lvaluation

Liquidation preference

The right of preferred holders to be paid back <em>first</em> in an exit — a fixed amount off the top before common shares see a dollar.

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Dvaluation

DCF

A valuation that discounts a company's projected <em>future cash flows</em> back to today — value as the present worth of what the business will generate.

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Svaluation

Sum-of-the-parts

Valuing a company by valuing each business segment <em>separately</em> and adding them up — the right lens for conglomerates and diversified firms.

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Dvaluation

Down round

A financing raised at a <em>lower</em> price per share than the previous round — a valuation markdown that dilutes existing holders and can trigger anti-dilution.

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Tvaluation

Terminal value

The value of all cash flows <em>beyond</em> a DCF's explicit forecast — usually the largest single component of the answer.

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