The Price-to-Earnings ratio (PER or P/E) is the ratio of a company's equity value (market capitalisation or book equity value) to its net income — expressing how many years of current earnings are implied in the equity price. PER = Equity Value / Net Income. It is widely used in listed company comparables and in valuation by the income approach for mature, profitable businesses. Its limitation is sensitivity to accounting policy (depreciation, provisions) and capital structure (financial leverage amplifies net income volatility) — making EBITDA-based multiples generally more reliable for unlisted company transactions where capital structures differ.

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Example: a Swiss listed company trades at a PER of 18x on CHF 5.0 million net income — implying an equity market capitalisation of CHF 90.0 million. For an unlisted acquisition target with CHF 1.8 million net income, applying the sector PER of 18x implies an equity value of CHF 32.4 million — but this must be adjusted for the 20% illiquidity discount (CHF 25.9 million) and verified against EBITDA-based multiples (CHF 22.0 million at 8x EBITDA) for consistency.

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Hectelion uses PER as one of several valuation cross-checks in comparable analysis, adjusting for capital structure differences and illiquidity before concluding on value.