In addition to the income approach and the guideline public company method, the guideline transactions method was considered and applied. Duvall and his advisers noted:

• Pricing multiples from several recent acquisitions of private companies in the industry indicated a MVIC to EBITDA multiple of 6.0.
• Several of the acquisitions studied were viewed as similar to Able because of similar revenue bases and limited diversification. The overall risk and growth characteristics of the acquired companies and Able were viewed as similar.

i. Discuss differences between pricing multiples from the guideline transactions and guideline public company methods.

ii. Explain the calculation of a pricing multiple using the guideline transactions method.

iii. Calculate the pricing multiple appropriate for Able.

iv. Calculate the value of Able using the guideline transactions method.