BV813-CON - EBITDA Single Period Income Capitalization for Business Valuation
Category: Business Valuation
Continuing Education: 1
Registration
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Session Description
The focus on the EBITDA of private companies is almost
ubiquitous among business appraisers. This session addresses the relationship
between depreciation (and amortization) and EBIT as one measure of relative
capital intensity. This relationship, "the EBITDA Depreciation Factor," is then
used to convert debt-free pre-tax (i.e., EBIT) multiples into corresponding
multiples of EBITDA. Mercer presents analysis that illustrates why the pervasive
rules of thumb suggest that many private companies were worth 4.0x to 6.0x
EBITDA, plus or minus, have had such stickiness. He will then address the likely
impact of the Tax Cut and Jobs Act on private company enterprise value
multiples. This session then suggests a methodology based on the Adjusted
Capital Asset Pricing Model, whereby business appraisers can independently
develop EBITDA enterprise value multiples under the Income Approach and includes private and public company market evidence.
No prerequisites for this course.
Agenda
There is no available agenda for this course.
Learning Outcomes
See session description.