January 2019 Business Valuation Insights

BVI Law: Rover Pipeline LLC v. 10.55 Acres (2018 U.S. Dist. LEXIS 157188) - Court excludes defense expert testimony, citing failure to follow mandated methodology and standard of value. >> Learn More

  • BVI Toolkit: How much control does a business owner have? How readily can the business interest be converted to cash? What is the purpose of the valuation engagement? Those are the main questions that need to be addressed by the valuation specialist as they represent a starting point to guide the valuation analysis.

    Levels of Value:

    Strategic Value / Synergistic Value - represents investment or synergistic value basis - this is not fair market value;

    Control Value - relates to controlling and marketable value on a fair market value basis - note, a controlling interest in a privately held business may also be subject to a discount for lack of marketability (DLOM) but usually not at the same level as a minority or non-controlling interest;

    Minority Marketable - represents non-controlling but marketable level of value (includes DLOC - discount for lack of control);

    Minority Non-marketable - represents non-controlling and non-marketable level of value (includes DLOC and DLOM).

  • BVI Industry Highlight: Which industry sectors have the highest EBITDA multiples? According to research presented by the BVR Resources, the information sector and the mining/ gas extraction sector exhibited the EBITDA multiples of 11.1x and 8.6x, respectively. At the other end of the spectrum, the lowest EBITDA multiples were found in accommodations/ food services, resulting in the EBITDA of approximately 2.5x.

    Across all sectors, BRV sites median EBITDA multiple to be at 3.0x.

If you have any questions or your clients need assistance with business valuation engagements, please contract us or visit our website www.araliyavaluation.com

Nataliya Kalava