Total IBA Data Base SIC Code 1711

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Table 26 IBA Valuation Multiples ‐ Direct Market Data Method
In order to develop the indicated values a gross sales and discretionary earnings base must be calculated. Referring to Table 19 Trend Line Static Sales, the sales figure that will be used as abase for developing an indicated value is $8,281,500 and the discretionary earnings (See Table 22 Owner’s Discretionary Earnings Calculations) is $2,284,481. Transactions included in the IBA database reflect sale prices that were paid by buyers based in large part on the buyer’s expectations with regard to the future of the business purchased. In effect, the buyers of these businesses are purchasing the businesses on tomorrow’s sales or earnings. Therefore, as in similar applications of valuation methodologies (remember that Revenue Ruling
59‐60 states that, valuation … is a prophesy as to the future) the future performance (sales or earnings) should be forecast into the future (i.e., at least one year out) before applying the valuation multiple in estimating value.
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The indicated values, calculated by using the valuation multiples derived from the
IBA data, result in values that are considered to be control, non‐marketable, meaning that a discount for lack of marketability will not need to betaken. The
IBA database information used to calculate the valuation multiples are based on private company transactions. One of the characteristics of private company transactions is that the illiquidity aspect (i.e., the time and cost it takes to find a buyer, agree on a price, and then complete the transaction) has already been factored into the results by the actuality of the transactions contained in the data
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Miles, Raymond C. 2005. Technical studies of the IBA transaction database. Plantation, FL The Institute of Business Appraisers. Part XVIII.

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