To apply price to revenue multiples:

1.For each data source review the Revenue amount and change it if necessary. If you normalized earnings (see the first question on the Questionnaire), the default revenue value comes from the Normalized Results section of the Normalized Earnings worksheet. If you did not normalize earnings, the default value comes from question 14 on the Questionnaire.

2.Enter the P/R Ratio derived from your analysis of comparable transactions from the data source. A discussion of that process is beyond the scope of this document. See any documentation available for the data sources.

3.Click on the Calculate Now button to update the worksheet and apply the inputs you have entered.

4.Assign a Weight to the Indicated Value calculated for the data source. Reasons for assigning a higher weight include more transactions from the data source that are comparable to the business you are evaluating, or the comparable transactions are for businesses that more closely resemble the subject business.

5.Click on the Calculate Now button to update the Weighted Value line.

Revenue Multiples Inputs

To apply price to earnings multiples:

1.For each data source review the Earnings amount and change it if necessary. If you normalized earnings, the default earnings value comes from the Discretionary Income line in the Normalized Results section of the Normalized Earnings worksheet. If you did not normalize earnings, the default value comes from the Discretionary Income at the bottom of the Earnings worksheet.

2.IBA Market Data reports Discretionary Earnings, which is defined as following:

Annual earnings before owners' compensation expense, interest expense, and income tax expense.

BIZCOMPS® reports Seller's Discretionary Earnings, defined as:

Net profit before taxes and any compensation to owner, plus Amortization, Depreciation, Interest, Other Non-Cash Expense and Non-Business Related Expense. Normally to one working owner.

Neither of these earnings definitions match the Discretionary Income calculation used in BESWeb. To correct for the difference, enter an amount in the Adjustments line. The amount you enter should compensate for the difference between the earnings definition used by the data source and the Discretionary Income figure calculated by BESWeb.

3.Click on the Calculate Now button to update the worksheet and see the results of your inputs.

4.Enter the P/E Ratio derived from your analysis of comparable transactions from the data source. A discussion of that process is beyond the scope of this document. See any documentation available for the data sources.

5.Click on the Calculate Now button to apply the P/E ratios.

6.Assign a Weight to the Indicated Value calculated for the data source. Reasons for assigning a higher weight include more transactions from the data source that are comparable to the business you are evaluating, or the comparable transactions are for businesses that more closely resemble the subject business.

7.Click on the Calculate Now button to update the Weighted Value line.

Earnings Multiples Inputs

BESWeb calculates high and low values by applying a percentage spread to the Total Weighted Value. The default spread is 7%, meaning that the High Value is set 7% above the Total Weighted Value and the Low Value is set 7% below. To change the spread:

1.Enter a new value in the Plus/Minus Range input.

2.Click on the Calculate Now button.

Comparative Company Value Calculation