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Respondent’s expert first valued IHC using the market
comparable approach. He selected nine public companies, on the
basis of their products, markets, growth prospects, and risks,
from the companies listed under Standard Industrial
Classification (SIC) codes 1541/1542, general commercial
contractors; 1799, special trade contractors; 1623, water, sewer
and utility contractors; 1629, heavy construction; and 1791,
structural steel construction. He determined the following
market ratios for the nine companies: Price/revenue,
price/earnings before interest and taxes (EBIT), price/net, and
price/book value. In a few cases, the ratios could not be
calculated because of deficit earnings. Respondent’s expert
calculated an average of the comparable companies’ ratios for
each type of ratio; he then calculated another such average
eliminating the companies with the highest and lowest values for
each type ratio; lastly, he adjusted the latter averages to fit
IHC, the adjustments mainly representing the difference in size
between IHC and the comparable companies. The resulting ratios
were as follows:
P/Rev P/EBIT P/Net P/Book
Average 0.44 12.55 29.72 1.30
Average excl. high/low 0.44 10.90 24.34 1.05
Conclusion (IHC) 0.30 10.00 20.00 1.00
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