What It’s Worth: Valuing Jewelry Stores
November 2023 PDF (113 pages)
BVR (editor)
Business Valuation Resources, LLC
Valuation Considerations in High Inflationary Environments
After more than a decade of modest price increases, the U.S. Consumer Price Index increased by 9.0 percent in June 2022 which is the largest increase since January 1982, the tail end of The Great Inflation which began in 1965 and lasted for approximately 17 years. With inflation at its highest level since The Great Inflation, valuation analysts will have to consider macroeconomic factors that have not been present in the U.S. economy in over ...
BV News and Trends September 2022
A monthly roundup of key developments of interest to business valuation experts.
Beware of Meme Stocks
Starting at the end of 2020 and continuing through 2021, numerous publicly traded companies saw their shares became “meme” stocks often related to trading activity sourced to the Reddit board WallStreetBets. Most market observers think of the GameStop Corp (NYSE: GME) saga as the most infamous example of a meme stock, but many other stocks have been come to be known as meme stocks. If not careful, appraisers can encounter issues in both the income ...
BV News and Trends August 2022
A monthly roundup of key developments of interest to business valuation experts.
BV News and Trends June 2022
A monthly roundup of key developments of interest to business valuation experts.
The DCF is ‘untestable,’ per new paper
The discounted cash flow method works fine for bonds but not for businesses, projects, or stocks because it is untestable, claims a new paper.
Free model helps take DCF a step further
In an article “Analytical Insights From DCF Value Analysis,” the authors include a free model business valuers can use to take their “DCF calculation a step further and analyze the resulting value into four components.”
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 ...