Price indexes

Introduction

Price indexes are intended to be used as general guides or starting points for a valuation, as there are many factors that can have an impact on a company’s value. Information may not always be available on the exact number, size or sector of the companies which have been used to produce the index multiples. Some indexes exclude companies that are loss-making at an EBITDA level, which leads to the average sale price being higher than it would be if all transactions were included. Check when the index you use was last updated and consult the methodology section to gain an understanding of how the multiples have been calculated, to ensure you are using the most relevant data available.

Cases such as Foulser & Foulser v HMRC [2015] demonstrate the difficulty of reaching a valuation. In this particular case, Mr and Mr Foulser’s chosen expert valued Mr Foulser’s 51% shareholding in BG Foods at £6,000,000, and Mrs Foulser’s 9% holding at £243,750, while HMRC’s expert valued Mr Foulser’s holding at £20,638,000, and that of Mrs Foulser at £2,500,000. There are a number of different tools and methods available which can lead to valuers reaching widely disparate final valuation figures for the same company. There is no one formula for company valuation but courts often prefer tried and tested methods. Our Legal cases page contains further details and related articles for this case and others.

The latest BVB Insights overview provides access to private company multiples transaction data. ICAEW members, Business and Finance Professionals, ACA students and Forensic & Expert Witness/Valuation Community subscribers can access the overview as a free member benefit.

Additionally the ICAEW Library holds a number of valuation books and articles written by industry experts; these can guide you through complex topics such as valuing unquoted shares. In particular Bloomsbury’s 'Practical share valuation' (2019) contains a chapter on Published data which covers available sources of public data, including a section on using the BDO PCPI.

Indexes list

Damodaran Online multiples data
Annually updated global industry multiples, collated by Aswath Damodaran, a Professor of Finance at the Stern School of Business at New York University.

Private company multiples
BVB data and analysis on UK private company multiples. Access data on 11 sectors and over 40 sub-sectors, plus commentary on current trends and expected developments. ICAEW members, ACA students and Forensic/Valuation Community subscribers can access the overview as a free member benefit.

Price Earnings Ratio Database (PERDa)
Tracks average European P/E ratios based on data from completed private company deals. Data for the UK is published in the twice-yearly newsletters. PERDa does not publish sector-specific ratios.

Private Company Price Index (PCPI)
Quarterly newsletter from BDO which includes an analysis of the price-to-earnings (P/E) ratio for private company sales in the UK. The ICAEW Library holds reference copies from 1995 onwards - please contact the Library if you would like to consult these.

PWC Financial Services industry valuation insights
Highlights from PWC's quarterly deal valuation summaries for the banking, insurance and asset management sectors, including trends in market multiples, related transactions and transaction benchmarking analysis.

UK200Group SME valuation index
 Annual index which includes the median and mean P/E, EBITDA and average deal size from transactions involving the purchase or sale of real UK businesses (asset or share deals). The ICAEW Library holds reference copies from 2014 onwards - please contact the Library if you would like to consult these.

 

See also:

• P/E ratios
  Price/earnings ratios can be used for investment analysis and company valuation. Our guide looks at the sources available for P/E ratios.