Transaction databases can be powerful tools

Description

Abstract: Appraisers use the guideline merger and acquisition method, a subset of the market approach, to derive a company’s value using samples of comparables (or guideline companies). To do so, they frequently refer to several private transaction databases to select appropriate comparable transactions. This article lists some of these database sources and points out some of their pros and cons. In addition to noting several criteria valuators use to collect a manageable sample of strong comparables, the article discusses how valuators calculate appropriate pricing multiples. A sidebar looks at other factors they typically consider.