Issues Using Transactional Databases and whether there is a Florida Effect that Biases the Transaction Multiplies In this article, the author discusses issues that impact the transaction multiples. He warns appraisers that it is dangerous to assume that the data offered by the transactional databases is consistent from transaction to transaction and, therefore, can be combined into a single sample and then compared to the subject of the valuation. In the article, he discusses three issues. Those are: 1) the vast differences in selling prices reported by the transactional databases; 2) the distorting effect of Florida comparables; and 3) the…
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Given a Fixed Amount of EBITDA After reading Steve Egna’s article in the April 12, 2017 issue of QuickRead Buzz, in which he suggests that a larger multiple of EBITDA is realized as the number of employees of the selling business increases, the author considered testing whether that same approach could help explain why a certain amount of EBITDA would generate multiple amounts of MVIC. In this article, the author shares his findings.
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Can private companies really increase their value 80-100 percent by limiting unsystematic (controllable) risks? The November/December 2013 issue of The Value Examiner featured Ken Sanginario’s article entitled, “The Valuation Business: A Strategic Road Map for Success.” In this article, Sanginario answers questions raised by skeptics to make the case that value doubling for private companies is possible.
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A Valuation Principal Takes Issue With Revenue Ruling 59-60: “Does Analysis of Macroeconomic Conditions Add Credibility to My Opinion of Privately Owned Company Value In My Region?” Rick Warner, ASA, AVA, Principal, Great Lakes Valuations writes that “Most of us as appraisers are familiar with Revenue Ruling 59-60 and its prescription for factors to be considered as part of the valuation of the stock of closely held companies . . . And while I agree with most of what 59-60 has to say, I do have a bone to pick . . . with at least one of the…
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The “Market” is Not Always Right When it Comes to Value, Especially in M&A Transactions The mergers and acquisitions market began a slow recovery this last year after a sharp downturn in 2009. Was the slowdown caused by banks reducing lending activity, cash hoarding by businesses, economic uncertainty, or the simple failure of buyers and seller to agree upon price? Michael Blake takes a look at how value is variously defined—“fair market value,” “fair value,” “investment value,” and “market value”—and offers an assessment of what may prove to be the primary market M&A activity drivers going forward.