Contributors: Cynthia L. Cronin-Kardon and Mia Wells
Valuation is used in business to determine the price participants are willing to pay or receive to buy or sell a business. Needless to say, the seller is looking to make as much profit on the deal as possible while the buyer hopes to pay as little as possible. Various resources can help determine the best price for the transaction. Listed below are some Lippincott Library resources to help students with assignments for a number of Wharton courses including FNCE207/728 – Corporate Valuation (which also has a course guide); FNCE250/750 – Venture Capital & the Finance of Innovation; and FNCE251/751 – Finance of Buyouts & Acquisitions.
You’ll want to search for precedent transactions in the industry of the company you are valuing. Several sources allow you to search for comps by industry (SIC code, NAICS code, or alphabetically by name).
BizComps is a database of business sale statistics which are based on small business sales transaction data. After searching by SIC or NAICS code, you’ll be presented with a list of recent deals. Select those of interest and you can run a “Transaction Analysis,” which will give summary statistics/multiples on the deals you’ve chosen. Ask to be logged in by a librarian at our Reference Desk.
Business Valuations by Industry is a print source available at Lippincott Library Reference Desk (call number HG4028.V3 B78). It includes detailed studies of actual mergers and acquisitions, including deal “tearsheets”. This source is arranged by industry and includes actual transactions from 2007 through 2009. Profiles of buyers are included as well as some some foreign transactions and deal terminations. This is a great resource when you want to profile selected, covered deals.
Beta measure the volatility of an industry or company within the market as a whole. Betas help to calculate the risk of an investment.
For industry betas, use the Ibbotson SBBI Valuation Yearbook, a print guide held at our Reference Desk (call number HG4028.V3 S86).
Company betas are in Bloomberg, available in the Yablon Financial Resources Lab here in Lippincott, or the Forum level of Huntsman Hall. Search for a company of interest and run the Beta function by typing BETA <Go>.
It’s always smart to look to the experts for advice – these sources will give you tips and tricks when performing a valuation for a company within a certain industry.
Business Reference Guide is a print source located at Lippincott Library Reference Desk (HD1393.25 .B87). This source provides several types of information which can be used for pricing businesses and franchises. It is organized by industry and includes industry statistics from IBISWorld, “rules of thumb” by industry analysts, pricing tips, benchmarks, commentary, expenses as a percentage of annual sales and industry costs.
Standard & Poor’s Net Advantage provides industry surveys. One unique feature of this source the section included for every industry on “How to Analyze a Company in this
Industry”. To access this, click on Industries, select the survey of interest. Next scroll to the chapter titled, “How to Analyze a(n) […] Company,” which also contains a section on Equity Valuation as well as a glossary of industry terminology.
To track multiples of a company over time, use the sources listed below. This will help you price out the company itself or help you to compare it against a similar firm.
S&P Capital IQ provides lots of financial data including multiples. MBAs can access CapIQ via MBA Career Management, while Wharton undergraduates can come to the Yablon Financial Resources Lab and ask to be logged in by a librarian. Search for a public company of interest and look for Financials/Valuation in the left menu. You can change the date range to see multiples over time, as well.
Bloomberg is available in the Yablon Financial Resources Lab or the Forum level of Huntsman Hall. Search for a company of interest and run the Financial Analysis function by typing FA <Go>. Look for the Enterprise Value tab.
Past M&A deal tearsheets
You may find it helpful to look for past deals to get a sense of how many deals a company has done in the past, what were the specifics of a deal or how active the M&A market is in a certain industry.
Thomson ONE – note that this resource only loads with full functionality when using Internet Explorer. Once inside, scroll over Screening & Analysis, then Deals & League Tables, then M&A to select either a Quick Search or Advanced Search.
Zephyr – select Zephyr Advanced. Pick the variables to define your search. Below is a screenshot of a list of deals. You can click on any of these to get a detailed summary of the deal.
This post may have additional information – What’s the Deal? Researching Specific M&A Deals