Sector-Specific Metrics & Football Field
Industry-specific valuation multiples and synthesizing multiple methods into a single view
~15 min read
Not every business can be valued with EV/EBITDA. Different industries have different economic drivers, and the valuation multiples that matter most vary accordingly. A SaaS company with 90% gross margins and negative EBITDA cannot be valued on earnings, but its annual recurring revenue (ARR) is highly predictive of future value. A hospital system is best compared on a per-bed basis. A cell tower company trades on EV per tower. Understanding which metrics matter in which sectors is a core skill in PE, because funds specialize by industry and need to speak the language of their target markets.
Once you have run multiple valuation methods (trading comps, precedent transactions, DCF, LBO), the final step is synthesis: combining those outputs into a single, defensible view of what the business is worth. The standard tool for this is the football field chart, a horizontal bar chart that displays the valuation range from each methodology side by side.
| Sector | Primary Metric | Why This Metric | |
|---|---|---|---|
| SaaS / Software | EV/ARR or EV/NTM Revenue | Many SaaS companies are pre-profit or reinvesting heavily, making EBITDA misleading. ARR captures the value of sticky, recurring revenue streams | |
| Healthcare Services | EV/Bed, EV/Physician, EV/EBITDA | Capacity-based metrics reflect the physical infrastructure that drives revenue. Hospitals are valued per bed; physician practices per provider | |
| Media & Telecom | EV/Subscriber, EV/User | Subscriber counts capture the value of the customer base. Cable, streaming, and wireless companies are benchmarked on a per-subscriber basis | |
| Real Estate | $/Square Foot, Cap Rate, EV/Acre | Physical assets drive value. Cap rate (net operating income / property value) is the standard yield metric, analogous to an earnings multiple inverted | |
| Financial Services | Price/Book, Price/AUM | Banks and asset managers hold financial assets on their balance sheets. Book value and assets under management are the natural denominators | |
| Energy & Mining | EV/Reserves, EV/Production (BOE/d) | Value is driven by reserves in the ground and current production rates. BOE (barrels of oil equivalent) normalizes across oil and gas |
Revenue Multiples vs. EBITDA Multiples
The choice between revenue and EBITDA multiples depends on the target's profitability profile and growth stage:
Use EV/Revenue when:
- The company is pre-profit or has volatile/negative EBITDA
- Margins vary widely across the peer group, making EBITDA comparisons misleading
- The business is in a high-growth phase where current profitability understates long-term earning power
- The sector convention favors revenue (e.g., early-stage SaaS, biotech)
Use EV/EBITDA when:
- The company is profitable with stable, positive margins
- The peer group has reasonably comparable margin profiles
- You want a metric that captures operating efficiency, not just top-line scale
- The business is mature enough that current EBITDA is a meaningful proxy for cash flow
As a rule of thumb, revenue multiples are less precise because they ignore profitability entirely. A company trading at 5x revenue with 50% EBITDA margins is fundamentally different from one at 5x revenue with 10% margins. Always consider revenue multiples alongside margin data to avoid misleading comparisons.
The Football Field Chart
A football field chart is a horizontal bar chart that displays the implied valuation range from each methodology on a single page. Each bar represents one method (trading comps, precedent transactions, DCF, LBO, sometimes a 52-week high/low), and the width of the bar shows the low-to-high range for that method. The bars are stacked vertically so the viewer can see where the ranges overlap.
The chart is called a 'football field' because the horizontal bars with range markers resemble the yard lines on a football field. It is one of the most recognized deliverables in investment banking and PE, appearing in virtually every pitch book, board presentation, and fairness opinion.
Key elements of a well-constructed football field:
- Each bar labeled with the methodology name on the left
- Low and high values marked at each end of the bar
- A reference line or shaded zone showing the proposed deal price or recommended range
- Consistent units (enterprise value or per-share equity value, not a mix)
- Notes explaining key assumptions for each range (e.g., 'DCF assumes 10% WACC, 2.5% terminal growth')
Triangulating a Fair Value Range
The football field chart is not just a visual. It is the basis for the final valuation conclusion. The process of combining multiple methods into a single recommended range is called triangulation. Here is how experienced practitioners approach it:
- Identify where the ranges overlap. If trading comps suggest $450M-$550M, precedent transactions suggest $500M-$600M, and the DCF suggests $480M-$620M, the overlap zone of $500M-$550M is where multiple methods agree. This convergence zone is the most defensible value range.
- Weight the methods by relevance. Not all methods are equally useful in every situation. For a PE deal, the LBO floor and precedent transactions carry the most weight because they reflect how financial buyers actually price deals. For a fairness opinion in a public company merger, the DCF and trading comps may carry more weight.
- Explain outliers. If the DCF produces a range far above the other methods, explain why (perhaps aggressive growth assumptions or a low WACC). If the LBO floor is well below trading comps, explain the gap (perhaps limited leverage availability or the company's growth does not translate to PE returns).
- State your conclusion. After considering all methods, state a recommended valuation range and explain which methods you weighted most heavily and why. A strong valuation conclusion sounds like: 'Based on the convergence of trading comps, precedent transactions, and our DCF analysis, we believe the fair enterprise value range is $500M-$560M (10-11x EBITDA). The LBO floor at $460M provides downside support, and strategic interest could push value above $600M.'
Football Field for a Mid-Market Healthcare IT Company
A sell-side advisor is preparing a football field chart for a healthcare IT company with $45M EBITDA. The team has run four valuation methods:
- Trading comps: 10-12x EBITDA = $450M-$540M EV
- Precedent transactions: 11-14x EBITDA = $495M-$630M EV
- DCF (10% WACC, exit multiple method): $470M-$580M EV
- LBO floor (20% IRR, 5.0x leverage): $420M-$470M EV
The football field shows clear overlap in the $470M-$540M range, where three of the four methods agree. The LBO floor at $420M-$470M sets the bottom, confirming that even a financial buyer can pay at least $420M. The precedent transactions extend to $630M, but those higher multiples reflect strategic premiums that may not materialize.
The advisor recommends a target marketing range of $490M-$560M (approximately 11-12.5x EBITDA), noting that competitive tension between financial and strategic bidders should push the final price toward the upper end. The LBO floor gives the seller confidence that a minimum of roughly $420M is achievable even in a challenging market.
Illustrative example based on typical healthcare IT M&A parameters
Quiz: Sector-Specific Metrics & Football Field
6 questions · ~3 min