In 2011, private-equity firms paid acquisition prices averaging nearly nine times the earnings before interest, taxes, depreciation and amortization, or Ebitda, of target companies.

WSJ: Private-Equity Firms Forced to Evolve

Another figure that troubled investors is LinkedIn's forecast for its earnings before interest, taxes, depreciation and amortization, or EBITDA. This measure provides an inkling of how much money the company is likely to make.

NPR: LinkedIn's Disappointing Outlook Eclipses Big 1Q

Debt-service coverage is defined as EBITDA, or earnings before interest, taxes, depreciation and amortization, relative to the current portion of long-term debt and interest.

FORBES: Two signs private companies are stronger

He advises buying when pharma is trading at low multiples of earnings, sales, cash flow (in the sense of earnings before interest, depreciation, taxes and amortization but before capital spending) or all three.

FORBES: Valuing Pharma Like Metal Benders