Extreme Makeover: IBA Market Database Gets a Face Lift

New IBA Market Database Tools Empower Valuators to Provide More Concise and Accurate Results: Here’s How.

The IBA Market Database includes close to 40,000 comparables, a valuation analyzer, and lots more. Paul French’s review, from the National Litigation Consultants’ Review (NLCR), explains the depth of data now available on the web, and explains how to leverage this exciting new tool.

The IBA Market Database is nothing new to those of us who having been doing business valuation, but it certainly has come a long way since the first time I used it. Most business valuators have at one point or another relied on the IBA Market Database to obtain the necessary comparables needed to produce a market approach value.  If not IBA, BizComps, or Pratt Stat’s; all recognized and generally accepted sources of market data.

Ten years ago, a market data request for a particular SIC code by e-mail would have provided a list of sales information in a simple Excel worksheet.  It was left to the valuator to do any type of analysis needed from the list of comparables provided.  This process alone could be very time consuming in the process of completing a market approach to business valuation.  Today, the data analysis needed can be obtained with a few mouse clicks.

KeyValueData is now providing a new form of the IBA Market Database that is not just impressive, but quite easy to use.

Below is the search bar that provides the user with options for refining the search results provided by supplying an SIC code.

The software enables the user to search by inputting one to three SIC codes at one time. However, the user must know the SIC code of the relevant industry they are searching for.  The software does not provide a drop down list of SIC codes with descriptions to choose from nor does it allow you to search for an SIC code by keyword. The user must also enter at least one complete SIC code;  a partial SIC code returns no results. So, for example, searching for the general ‘Eating and Drinking Places’ SIC code of 58 or 5800 will return no results.

Once the relevant SIC code has been determined and entered, the search button is pressed to request the database to provide all sales records that exactly match the SIC code(s) provided by the user.  Upon entering the SIC code 5812 (Eating Places), the following results are returned in the Review Records portion of the screen. From here, the user can see that there are 4,974 records under the 5812 SIC code.

If the user has determined that they only need to view the sales records for pizza companies, the user may use a keyword to refine the returned results.

By typing “pizza” in the keyword box and pressing the search button, any sales records without “pizza” in the description field is removed from the results.

The user may wish to further refine the record results and can do so based on location, reported sales, reported discretionary earnings, sales price, start date of the sale, and the end date of the sale.  All of these search options are found on the search bar at the top of the screen.

The third section of the new IBA Market Database offers three different export options to export your search results into an Excel workbook. The first option, Data Only, exports a spreadsheet of the sales records along with any income or balance sheet information that may have been provided to IBA along with the sales information. The IBA Market Database refers to this as extended data, and asking for this information along with the sales information is a new procedure. Therefore, there may not be enough extended data for an analysis to be performed.

The second export option, Direct Market Data Method Report, exports the data records, the extended data, worksheets, and charts that are particularly helpful when performing the Direct Market Data Method.  This includes price to sales ranges, price to discretionary earnings ranges, statistical analysis, price to sales charts, and price to discretionary earnings charts.  This option also provides the user with interactive tools that assist the user with necessary analysis.  Below is an example of price to sales and price to discretionary earnings limits of selected sales transactions.

The third export option, Transaction Analysis, is much like the Direct Market Data Method export option, and provides the same statistical analysis tools.  It also provides histogram data, transaction by sales graph, transaction by discretionary earnings graph,  price to discretionary earnings over discretionary earnings graph, transactions by price to sales graph and transactions by price to discretionary earnings graph in addition to the some of the same graphs provided in the Direct Market Data Method export option.  Below is an example of the histogram data of the selected transactions.

Both the Direct Market Data Method export option and the Transaction Analysis export option allows the user to further narrow down the selected transactions by selecting them individually or using the Tools tab to select transactions based on certain criteria.  The following is a depiction of what the Tools tab offers the user to perform further analysis on all or a selected few of the transactions.

Overall this new way KeyValueData has presented the IBA Market Database has made it a much easier and faster way to access and analyze IBA market data transactions.

KeyValueData also offers other very user friendly applications that can be accessed through their website with a subscription.  In particular, I have found the IRS Corporate Ratios application as well as the Guideline Company application to be particularly useful.  The IRS Corporate Ratios application provides the user with a ratio analysis of tax returns based on the user’s chosen industry.  The Guideline Company application is very useful not only in finding comparable companies based on industry, location, or financial criteria, but also provides financial data and financial analysis of the selected comparable guidelines companies chosen by the user.

KeyValueData also offers subscriptions and applications for BizComps, National Economic Reports, Case Law, First Research Industry Profiles, S-1 Filings Database, Valuation Articles Database, Valuation Reports Library, BizMinor Industry Metro Reports, and others, all of which make our jobs as valuators much simpler and the valuation process significantly faster than it ever has been.

This article was originally published in the August/September 2010 issue of the National Litigation Consultants’ Review and was updated 12/19/2012.

Paul French is a litigation and valuation shareholder of Lain, Faulkner & Co., P.C., located in Dallas, Texas. He is the Chairman of NACVA’s Executive Advisory Board (2008-2009) and is the Chairman of the Texas Society of CPAs statewide Business Valuation, Forensics, and Litigation Services (BVFLS) Committee (2005-2009). Mr. French can be reached at (214)720-7558 or at pfrench@lainfaulkner.com.