This post focuses on some of the potential analytical issues that may be appropriate for consideration, in addition to all of the normal issues in a typical valuation, when capitalizing EBITDA using the ACAPM.

In a recent series of posts, we developed a means to develop direct and credible multiples of EBITDA applicable to specific valuation situations. This is important because EBITDA is part of the universal business language and is a term that appraisers, business owners and market participants understand. It is also important because until now, one way to capitalize EBITDA has been by using (often incomplete and/or dated) guideline transactions in other private or public companies. The other way has been through the use of guideline public companies, which may suffer in comparability based on size and many other differences.

Since writing the posts, I have had a number of opportunities to discuss the methodology with other appraisers and with clients. These conversations have encouraged me to write this single post to summarize this “new” method. In this post, we lay out the methodology for capitalizing EBITDA using the Adjusted CAPM in one place.

In 2012, I wrote a post on my former blog, Valuation Speak, titles Zynga and the High Cost of Concentrations.  In that post, I talked about two key concentrations that were causing its stock price to be battered.  The first had to do with a concentration in revenue in two games, Farmville and Mafia Wars. […]

Last week, I received an email from Janet, a recurring client asking to have a discussion with me about the value of recurring revenue. The question was interesting and stimulating and, I believe, of interest to many readers of this blog. This is a “first look” at recurring revenue. I plan to take at least a couple of other looks in the near future.