This paper is a non-fraud forensic examination of how various business valuation measures of privately held construction companies were impacted during the great recession (2007-2009). We examine 1,037 transactions from the IBA Market Database comparing the mean values of Revenue, Seller’s Discretionary Earnings (SDE), Price, Price/Sales, and Price/SDE from 2005-2016. We performed one-way ANOVAs to examine differences in mean values for four three-year time periods. We performed a stepwise multiple regression for the dependent variable Price. The results of the ANOVAs show that Revenue, Price, Price/Sales, and Price/SDE were lower during the 2008-2010 time period, all significant at the .01 level. The results of the multiple regression show Revenue as a predictor of transaction Price with an adjusted R 2 of .559 and a p value of .000. The results would be useful to valuation practitioners, and to academics using a case approach where valuation multiples must be selected.
Impact of Economic Recession on the Valuation of Closely Held Construction Companies
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Charles J Russo, Arundhati Rao, Charles L Martin Jr.; Impact of Economic Recession on the Valuation of Closely Held Construction Companies. Journal of Forensic Accounting Research 2021; doi: https://doi.org/10.2308/JFAR-2020-019
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