The impact on shareholder value Knowing the value of a business and delivering real value to a client company entails far more than using EBITDA multiples or going along with a rule of thumb to keep the peace. As professionals, valuators must be far more rigorous in their engagements, and focus on delivering value. The obligation to identify, measure, manage, and mitigate the risks are their responsibility. In this candid analysis, Dr. Carl Sheeler shares some insights, based on his 1,000+ engagements, where he has found problems that led to disputes, misalignment of expectations, and company-specific risks that impair value…
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One Medical Practice Could—Depending on How Rules of Thumb are Applied—be Valued at Several Radically Different Prices. Find Out Why! Paul Hyde, in a recent Around the Valuation World™ in 90 Minutes webinar, explained why rules of thumb are dangerous to rely on for valuation. The focus of his argument relied on six simple graphics that illustrated how the value of one hypothetical medical practice could—depending on how a rule of thumb is applied—be assessed at either $800,000 or $200,000 . . . or any number of different variations in between!
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Myths about Middle Market Valuation Multiples Sometimes it seems as if the only requirements to be an investment banker are the ability to multiply two, usually single-digit numbers together and write your name. Hence, upon finishing the second grade, everyone is qualified. For example, take an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $10MM and the median lower middle market valuation multiple of five, which incidentally has nothing to do with the number of fingers on your hand.