In either case, this article is a must-read for practitioners who wish to avoid collecting samples of data that horribly skew the results of their valuations. These are situations which most appraisers are either not aware of or hope that their readers are not aware of. Three issues will be discussed in this report: 1) the vast differences in selling prices reported by the transactional databases 2) the distorting effect of Florida comparables and 3) the distorting effect of comparables that do not report the value of inventory. Too often appraisers assume that the data offered by the transactional databases is consistent from transaction to transaction and, therefore, can be combined into a single sample and then compared to the subject of the valuation. Over the last fifteen years I have spent thousands of hours researching the Pratt’s Stats, IBA, Bizcomps, and Peercomps databases trying to uncover inaccuracies and inconsistencies in the reported transactional data. Using the BIZCOMPS® Database to Value Small BusinessesĢ0 Valuation Databases & Resources in 60 Minutes The Use of Regression Analysis in the Market Approach The Misuse & Abuse of Guideline Company Transactional Data in Valuing a Business Using the Market Approach It is even more important for those practitioners who act as expert witnesses. This article is a must-read for practitioners who wish to avoid collecting samples of data that horribly skew the results of their valuations. Those are: 1) the vast differences in selling prices reported by the transactional databases 2) the distorting effect of Florida comparables and 3) the distorting effect of comparables that do not report the value of inventory. In the article, he discusses three issues. He warns appraisers that it is dangerous to assume that the data offered by the transactional databases is consistent from transaction to transaction and, therefore, can be combined into a single sample and then compared to the subject of the valuation. In this article, the author discusses issues that impact the transaction multiples.
Issues Using Transactional Databases and whether there is a Florida Effect that Biases the Transaction Multiplies
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