I'm looking at a company with ongoing annual CAPEX and I'm wondering about the most realistic way of evaluating the business.

1. Valuation based on EBITDA
2. Valuation based on EBIT
3. Valuation based on (EBIT - Average Annual CAPEX)

So #1 above is more favorable for seller yielding highest valuation and I'm sure nobody here would favor that. My question is the realistic choice between #2 and #3 above in the current seller friendly market condition. #3 will yield the cheapest valuation but is #2 the more realistic option here? Not to add to the confusion but is something like (EBITDA - Average Annual CAPEX) also an option?

I'm trying to see which is not too burdening on the buyer and which also realistically gets the deal done in the current market.