Instructor key — Module 1: Private Market Transaction Benchmarks & Small-Business Multiples
Instructor/solutions version. Keep separate from the student assignment during assessment.
Calculation solution
Three fictional comps have multiples 3.5x, 4.0x and 5.5x. Apply the median to $650,000 EBITDA.
Calculated result: 2,600,000.00000000 (actual USD, except where the question requests a ratio or return). The ordered midpoint is 4.0x; verify all price and earnings perimeters first. Use appropriate display rounding while retaining formula precision. This result is generated from the independent assignment inputs, not copied from the chapter answer.
Conceptual and judgment marking
A complete conceptual response identifies the measure's economic purpose, the defined perimeter and the risk of confusing it with another metric. Award up to 20 points for explanation, not terminology alone. For the applied question, award up to 15 for linking evidence to a concrete acquisition consequence; do not require an optimistic recommendation.
Spreadsheet marking
Award 15 of the 30 spreadsheet points for live links from assumptions, 10 for a coherent 10% mutation and predicted direction, and 5 for units, readable formatting and checks. Inspect formulas directly rather than accepting cached numbers. Use the instructor workbook for the controlling capstone model; this independent lab uses different inputs.
Calculation marking: 10 points for the correct equation/perimeter, 15 for intermediate arithmetic, and 10 for result, units and rounding. Overall pass requires 80 and all critical checks in the student version.
Original chapter practice solutions
The following solutions were moved out of the chapter so full answers no longer sit immediately below student questions. Match them in order to the chapter's practice problems.
Worked solution: Mean is (3 + 4 + 7) / 3 = 4.6667x; median is 4x. EV amounts are $300,000, $800,000, and $7 million, totaling $8.1 million. Total EBITDA is $1.3 million, giving an aggregate ratio of 6.2308x. The large high-multiple business dominates the aggregate ratio. A target-specific conclusion requires assessing relevance rather than selecting the most favorable summary.
Worked solution: Operating EV is $2.1 million and the multiple is 4.2x. The EBITDA denominator must retain an appropriate occupancy expense because property value was removed from the numerator. Removing the real estate and also eliminating rent would make the operating earnings artificially high for the price being analyzed.
Worked solution: The listing is 3x stated SDE on an incompletely defined asking-price basis. The completed deal is 4x EBITDA on an EV basis. Neither the denominator nor the transaction status matches. Obtain owner-replacement costs, included assets, and actual consideration before treating the observations as comparable.
Worked solution: Ordered multiples are 4.20x, 4.50x, 4.75x, and 5.25x. Median is 4.625x, producing $3.7 million EV. It does not prove Apex has the same risk, that the fictional observations are real market evidence, that debt funding is available, or that the seller will accept the number.
Worked solution: Treat it as unverified and exclude it from the evidence supporting the numerical conclusion until the original report and relevant table are obtained. The memorandum can identify Pepperdine as a research source to consult, but cannot convert a source's reputation into a statistic the team has not inspected. Preserve the distinction between source discovery and actual numerical support.