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Letter to the Editor: The Use of the Arithmetic Mean to Average Multiples

The author takes issue with an article that concludes that the harmonic mean should be used as the appropriate measure of central tendency for a sample of market multiples.

Do Not Use the Arithmetic Mean to Average Multiples

Valuation professionals should not use the arithmetic mean of multiples. It is mathematically incorrect because it gives excessive weight to high multiples. A multiple is an inverted ratio with price in the numerator. Therefore, the harmonic mean should be used as the appropriate measure of central tendency.

Valuing Enterprise Cash Flows

The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In Part 1 of the series, Chris Mercer and Travis ...

Global BVU News and Trends October 2020

Business valuation news from a global perspective.

What factors contribute to inconsistent business valuation multiples?

Three professors at the Leipzig Graduate School of Management reviewed 1,149 recent private equity cross-border transactions to determine the consistency of the business valuation metrics.

Global BVU News and Trends September 2019

Business valuation news from a global perspective.

BVU News and Trends July 2019

A monthly roundup of key developments of interest to business valuation experts.

Global BV News: P/E multiples rebound in India

The P/E multiples of a majority of industries have improved in the first quarter of 2019, according to the Duff & Phelps “Industry Multiples India Report – Seventh Edition.”

Global BVU News and Trends June 2019

Business valuation news from a global perspective.

BVWire—UK survey of multiples sources confirms lack of a perfect small-business valuation comparables resource

Business valuers in the UK often rely primarily on public-company multiples, given the lack of other comparables.

Last chance to participate in BVWire—UK’s survey of business multiples sources

BVWire—UK ‘s spot two-question survey on sources for valuation multiples in your business valuations will close in a few days.

Eatery multiples in latest Duff & Phelps report

Publicly traded quick service restaurants had a mean multiple of 16.5x (enterprise value as a multiple of EBITDA) in 2018 and are estimated to achieve a multiple of 16.8x in 2019, according to the “Restaurant Quarterly Update—Spring 2019” from Duff & Phelps.

Where do you find EV/EBITDA multiples for your business valuations? Let BVWire—UK know

One source, of course, is the BDO Private Company Price Index (PCPI). Q1 results for the PCPI were just released and are available now from BDO.

ICAEW Practical Business Valuation programme begins again this week

ICAEW offers its two-day valuation basics course again beginning 9 May in London (the second day is 24 May).

Global BV News: D&P debuts report on China multiples

Duff & Phelps has published its first edition of “Industry Multiples in China.”

Global BVU News and Trends April 2019

Business valuation news from a global perspective.

Global BV News: Valuation data for Switzerland

Multiples, margin data, cost of capital components, and more can be found in EY’s summary report (as of 4Q18) of relevant market data regularly used in valuations in Switzerland.

Global BVU News and Trends February 2019

Business valuation news from a global perspective.

Global BVU News and Trends January 2019

Business valuation news from a global perspective.

Global BV News: Industry multiples in India

Duff & Phelps’ fifth edition of its “Industry Multiples India” report for the quarter ended September 2018 provides a detailed overview of the market multiples of companies in 22 major industries in the S&P BSE 500 Index.

BVU News and Trends September 2018

A monthly roundup of key developments of interest to business valuation experts.

BVU News and Trends August 2018

A monthly roundup of key developments of interest to business valuation experts.

BVU News and Trends July 2018

A monthly roundup of key developments of interest to business valuation experts.

Sample size debate spills over onto LinkedIn

What’s the minimum number of transactions that should be used from a database such as BIZCOMPS or Pratt’s Stats?

Debate continues on use of statistics

“I can no longer stay a silent observer,” says Gary Trugman (Trugman Valuation) about the back-and-forth over how many transactions should be used in the application of the transaction method of appraisal.

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