| EBITDA Single Period Income Capitalization for Business Valuation
Program Type: VideoCast (Audio,Video, PPT Presentation)
Program Level: Basic
Prerequisites: Previous training or experience with the fundamentals of the subject matter being taught.
Advanced Preparation: None
Delivery Method: Group Internet-Based
CPE Credits: Two (2) Hours
Fields of Study: Specialized Knowledge & Applications
Shipping Weight: 0lbs. 0oz.
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 are worth 4.0x to 6.0x EBITDA, plus or minus, have such stickiness. 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.
After completing this webinar, attendees will be able to:
- Describe the relationship between EBIT and depreciation (and amortization) and why companies have relatively high or low EBITDA multiples
- Examine research about the "EBITDA Depreciation Factor" for public and private companies and learn how capital intensity impacts EBITDA multiples
- "Build" multiples of EBITDA for specific assumptions in unique valuation situations using the Adjusted Capital Asset Pricing Model. They will also then be able to employ those multiples to develop indications of enterprise value under the Income Approach to valuation
Who Should Attend
Z. Christopher Mercer, ASA, CFA, ABAR
Mr. Z. Christopher Mercer is the founder and chief executive officer of Mercer Capital.
Mr. Mercer began his valuation career in the late 1970s. He has prepared, overseen, or contributed to more than a thousand valuations for purposes related to mergers and acquisitions, litigation, and tax, among others. In addition, he has served on the boards of directors for several private companies and one public company.
Mr. Mercer has extensive experience in litigation engagements including statutory fair value cases, business damages and lost profits. He is also an expert in buy-sell agreement disputes. Designations held include Accredited Senior Appraiser (ASA) from the American Society of Appraisers, Chartered Financial Analyst® (CFA®) from the CFA Institute, and Accredited in Business Appraisal Review™ (ABAR™) from the Institute of Business Appraisers™.
In 2011, Mr. Mercer was appointed to the International Valuation Professional Board for the International Valuation Standards Committee (IVSC). The role of the International Valuation Professional Board is to promote the development of the valuation profession globally. Prior to this appointment, he served as the Chairman of the Standards Committee for the American Society of Appraisers.
Mr. Mercer is a prolific author on valuation-related topics and a frequent speaker on business valuation issues for national professional associations and other business and professional groups.