Applying the transaction databases in today’s economy takes time and judgment—and a newly updated Guide

BVWireIssue #86-2
November 11, 2009

Hot off the presses: The Comprehensive Guide to the Use and Application of the Transaction Databases, by Nancy Fannon and Heidi Walker, 2d edition has just arrived. This new, expanded version provides an updated FAQ for each of the databases (Pratt’s Stats®, BIZCOMPS®, etc.) plus the complete transcript and presentation slides from Fannon’s most recent BVR teleconference on the topic.

“Heidi and I are so thrilled with this second release of the guide to the transaction databases, particularly as the use of the market approach has come under increased scrutiny, making proper use of transaction data more important than ever before,” Fannon says, in a recent interview with BVR. The market approach is still one of the cornerstones of a complete opinion of value, under any standard of value or professional BV standard, even if transaction databases are sometimes maligned for the lack of uniformity among the data, and so forth. “In fact, this all is true,” Fannon says. The data reflect the lack of uniform behaviors among buyers and sellers in the marketplace.  “We can’t say ‘hey all you buyers out there, can you please all act the same way so it’s easier for us business appraisers?’”

So let’s think about what the databases really provide, Fannon adds. “They alert us to a transaction that has occurred, and the information available about it.” Valuators still have to analyze and interpret the data, get more information about a particular transaction or reject it. That takes time, Fannon says, and requires “a lot more work than just downloading an SIC code, taking a mean or median and applying it to your subject company’s revenue or some level of earnings—but when done with deliberation and thoughtful application, it can provide some of the most powerful evidence of value. We hope our new Guide helps you do just that.”  To hear the complete podcast/interview and to order the Guide, click here.

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