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Guest Business Sale Report Member Mon, 13 Oct, 2008

Businesses for sale | Private Company Price Index

The Private Company Price Index (PCPI)

Every quarter, the Business Sale Report will summarise the BDO Stoy Hayward Private Company Price Index (PCPI). The PCPI tracks the relationship between the current four month rolling average FTSE Non-Financials price earnings ratio (p/e) and the p/es currently being paid on the sale of private companies. The FTSE Non-Financials p/e is calculated from the p/es published in the FT. The private company p/e is calculated from publicly available financial information on deals that complete in the quarter.

As private companies are generally owner-managed, reported or disclosed profits tend to be suppressed by various expenses that may be non-recurring under a new owner. This will have been factored into the price the purchaser paid, but may not be reflected in the profits declared to the public. The effect of this is that the p/e paid as calculated from the publicly available information may be over stated. The PCPI tracks the discount between how public and private companies are being valued. This discount means valuation techniques can be used that are only relevant to public companies and apply them to private companies in the same sector.

The PCPI is generally recognised as the most authoritative source on private company values by practitioners in the market, including the Inland Revenue and leading accounting firms.

These quarterly updates are available in the subscribers section

Other areas covered:

The up to date Private Company Price Index

Summary of deal activity

Study of M & A activity in a certain market sector

 

 

 


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09 Oct 2008
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07 Oct 2008
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06 Oct 2008
The chief executive of Blacks Leisure, Neil Gillis, said he was looking at "all options" following a...[more]

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