Thumbs up – Court takes business valuation guide’s advice

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Abstract: Courts often expect business valuation experts to rely, at least in part, on the value of comparable entities when making their calculations. But in late 2011, the California Court of Appeals allowed a business valuation based on “rules of thumb” multiples, rather than comparables. As this article shows, an expert applied a 42% multiplier to the plaintiff’s physical therapy business; but the appeals court, following a business reference guide, supported a 100% multiplier, citing various marketability factors and the business’s health.