Valuing Businesses Using Regression Analysis A Quantitative Approach to the Guideline Company Transaction Method

Demystifies regression-based valuation through simple explanations, easy-to-understand charts, and time-saving bonus resources

Current methodologies using median, quartiles, or standard deviations to calculate revenue multipliers and cash flow multipliers often produce values that are wildly divergent. This forces the appraiser to choose between a very high or a very low value or consider averaging the values, opening the possibility for the appraiser to be challenged. On the surface, regression analysis appears to be the more complex, mathematical model, so many professionals shy away from using it out of fear that readers will be confused and reject the results of the appraisal. Valuing Businesses Using Regression Analysis solves this issue by breaking down regression to its simplest terms and providing easy-to-read charts and explanations that can be understood by all.

Since regression analysis does not come pre-installed in Excel, this book will show you how to enable Excel's regression in your computer. Then you'll learn four different Regression tools that can be used for business valuations or for forecasting in general. As an added perk, this book also comes with a template that simplifies the entire regression methodology into the click of one button. With a minimal amount of work, you can use this template to produce a compelling four-page valuation report.

• See why current valuation methodologies can be wildly inaccurate and why regression analysis is a practical and preferable alternative
• Learn how to set up Regression in Excel and use single-variable linear regression to predict revenue and cash flow multipliers
• Walk through the process for conducting more advanced analyses, including curved regression with outliers and multiple variable regression
• Use the bonus template to create attractive four-page valuation reports using regression analysis in Excel

This book is an excellent choice for valuators and other financial professionals ready to take the leap into regression analysis for more accurate, more objective business valuations.

Fred Hall (Jackson, CA) is the CEO and sole owner of Amador Appraisals and Acquisitions, Inc. During the last 18 years he has written business valuations for over 800 companies. Fred regularly presents lectures and webinars on business valuation techniques to a number of professional organizations in California and has been invited to present seminars on valuation methodologies at a number of conferences held by national organizations such as the Annual Murphy Business and Financial Convention in Florida, NACVA Appraisers' Conferences, the New York Society of CPA's Conference on Wall Street, and Financial Consultant's Super Conferences. Additionally, his appraisal research has been published in IBA's quarterly journal, the Business Appraisal Practice, Business Valuation Resource's quarterly, the Business Valuation Update, Thomson-Reuter's quarterly journal, the Valuation Strategies, and, NACVA's quarterly, The Value Examiner.

Foreword           

Preface                i

CHAPTER 1: Current Methodologies         1

CHAPTER 2: The Solution              15

CHAPTER 3: Identifying Outliers Using Re-gression            26

CHAPTER 4: Cash Flow Multiplier Regression        31

CHAPTER 5: Enterprise Multiplier              41

CHAPTER 6: Polynomial Regressions         45

CHAPTER 7: Multiple Variable Regression              50

CHAPTER 8: Selection of Transactions in the Sample          62

CHAPTER 9: Regression 2.0          92

CHAPTER 10: Using Excel’s Regression Utility        107

CHAPTER 11: Excel Valuation Template   125

CHAPTER 12: Conclusion

Acknowledgments            142

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