Specifics of Application of Multiples Method of Businesses Valuation in Ukraine

Abstract

We define, construct, justify, and test a regression model for predicting business value based on EPS, Sales, and Beta, performing adjustments for differences in international market conditions, as necessary. We then investigate the practicality of using the optimal system of market multiples for business valuation of  companies of defense and aerospace industry in Ukrainian market conditions.

We review relevant methodological approaches for assessing the effectiveness of corporate management, which we define as the value of the business determined using multiples within the relative approach to valuation. Next, we analyze the literature to contrast and compare positions of finance scholars on the specifics of performing multiples valuation. We then define, construct, justify a regression model for predicting business value based on EPS, Sales, and Beta, performing adjustments for differences in international market conditions, as deemed necessary. We test this system of market multiples for defense and aerospace industries, and investigate the practicality of this approach in Ukraine