Instructions |
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Instructions |
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For detailed information about the Direct Market Data Method, including how to apply the method and its theoretical basis, please visit the IBA website and review the tutorials under the Market Data section of the IBA home page. The limit lines on the DMDM Report workbook charts are explained in detail in the tutorials.
The first step in using the DMDM Report workbook is to examine the Price to Sales charts with your subject company in mind. Use the charts to help you determine the range of sales appropriate for your analysis. Remember that the larger the number of transactions included in your analysis, the more accurate will be the result. At least twenty transactions are needed for a meaningful analysis of upper and lower 25% limits of the market (see the Price to Sales (2) and Price to DE (2) charts), and at least fifty transactions are needed for a meaningful analysis of the upper and lower 10% limits (Price to Sales (4) and Price to DE (4) charts).
Deselect any transactions that you want to exclude from your analysis. Deselecting transactions should be done only for objective reasons, such as the subject company being significantly larger or smaller than the companies in the transactions in question, and therefore the transactions may not be relevant to the value of the subject. For more information about when transactions are relevant, review the tutorials on the IBA website.
Note: |
The IBA recommends that the appraiser disclose in some manner when transactions have been omitted from the data provided by the IBA. |
For more help see Transaction Analysis Workbooks.