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Avoid This Mistake When Using an Exit Multiple in the Terminal Year

There is nothing wrong with using exit multiples on the terminal year of a DCF, but the devil is in the details.

The Myth of the Healthcare Multiple

For most, the concept of a valuation multiple is easy for market participants to understand. Unfortunately, this simplicity of concept leads to widespread misapplication of valuation multiples and often results in sellers having unreasonable expectations. In the myth of the multiple, healthcare valuation expert Jason Ruchaber, CFA, ASA, will separate fact from fiction and explore the real financial and compliance considerations that drive FMV and purchase price in healthcare transactions.

When Averaging Multiples, the Arithmetic Mean Is Inferior to the Harmonic Mean

This article posits that using the arithmetic mean to average multiples is mathematically inferior. A multiple is an inverted ratio with price in the numerator. The harmonic mean is a statistically sound method for averaging inverted ratios. It should be used as a measure of central tendency for multiples, along with the median. Empirically, the harmonic mean and the median of a set of multiples are usually similar. Because the harmonic mean can be overly ...

BVU News and Trends April 2021

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

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 ...

New paper on IBOR reform and valuation

For many years, interbank-offered rates (IBORs) have set the benchmark rate for lending on an unsecured basis.

Do the Valuation Multiples You’re Using Actually Apply to Your Firm?

In my last Perspective (November 2018), I touched on the importance of why using the “right” level of profit was important when comparing valuations of one’s firm to others on an earnings multiple basis (e.g., 4.2x EBITDA, 3.9x EBIT, etc.). Although there are various levels of profit that firms rely on for quick pricing indications, I focused solely on EBIT (earnings before interest and tax) and EBITDA (earnings before interest, tax, depreciation & amortization) for the sake of simplicity.

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.

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.

EBITDA multiples by industry: New statistics on private-company selling prices

Highlights from an analysis of over 30,000 private-company acquisitions, including EBITDA multiples by industry and other statistics on selling prices and earning measures.

How does the Tax Cuts and Jobs Act impact business valuation?

Learn how tax reform has impacted the world of business valuation and how to navigate key issues facing business appraisers, including how to adjust pre-Tax Act valuation multiples for post-Tax Act business valuations.

DealStats: The future of comparable M&A transaction analysis is here

Explore the new DealStats platform that's revolutionizing comparable transaction analysis and providing business appraisers an objective reference point when benchmarking or valuing businesses. Learn about how DealStats offers statistics on private and public M&A transactions including valuation multiples, purchase price allocations, and more.

What’s a business worth? How to benchmark the value of a private company

Discover a quick method to benchmark a private company’s approximate enterprise value, and access real valuation multiples based on thousands of sold businesses in major industry sectors. Download a free e-book.

Work File Checklist for Documenting Valuation Multiples

The Mandatory Performance Framework (MPF) sets out requirements regarding how a valuation expert should adequately document his or her work and thought processes when engaged in a fair value for financial reporting assignment. It was specifically designed ...

Valuation multiples hit 4-year low in 1st quarter 2002

For the first quarter of 2002, median valuation multiples for acquisitions tumbled to their lowest levels since Business Valuation Resources has been tracking them for both Mergerstat/Shannon Pratt's ...

Market data for M&A

How to Use Transactional Databases for M&A , Shannon P. Pratt, The Journal of Corporate Accounting & Finance , March/April 2002, pp. 71-79. In M&A, it is helpful to compare th ...

Smaller companies have much higher cost of capital than big companies; Pratt's Stats multiples strikingly different

A new study on the Pratt's Stats™ database shows consistently lower valuation multiples for small companies than for "middle market" companies. The top company in the 10th size decile of Ibbotson ...

Valuation multiples and control premiums down in 4th quarter 2001

With five valuation multiples plus control premiums for almost 3,000 transactions spread over 16 quarters now in the Mergerstat/Shannon Pratt's Control Premium Study™ (CPS ), it becomes quite inter ...

Mergerstat / Shannon Pratt's Control Premium Study™ and Mergerstat® Review are two distinct services

One of the questions I am asked frequently is, What is the difference between Mergerstat/Shannon Pratt's Control Premium Study ™ ( Control Premium Study ) and Mergerstat® Review? This column addres ...

Pratt's Stats shows decreasing MVIC/EBITDA multiples

We are interested in knowing how the values of privately held companies in different industries have fluctuated in the last six years, and look at the Pratt's Stats database to find out.

2001 in review: BVU and J&L combine; active year in court

Databases proliferate; seven new BV books; market multiples drop As a result of subscribers' feedback from focus groups and reader surveys in 2001, we have decided to combine Judges & Lawyer ...

2000 marketability discounts as reflected in initial public offerings

This interview by Alina Niculita is based on the Valuation Advisors Study of pre-IPO transactions for the year 2000. The complete article describing the study is available on BVLibrary.com ...

www.BVMarketData.com sm expands

By Doug Twitchell * In addition to the newsletter you are now reading, Business Valuation Resources, LLC , also brings you several other business valuation-oriented products at www.BVMarket Dat ...

Transaction data valuation

Using Transaction Data to Value Closely Held Businesses – Two Strategies for Using Transaction Data, Raymond C. Miles, Business Appraisal Practice , Winter 2000-2001, pp.29-40. This article exp ...


n DEVELOPING VALUATION MULTIPLES USING GUIDELINE COMPANIES , Crow, Matthew R. CPA Litigation Service Counselor , Volume 1999, Issue 9, September 1999. In this brief, but informative, arti ...

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