Abstract

We use a survey approach to learn about valuation professionals’ choices and implementations of valuation techniques in practice. Most use both multiples and discounted cash flow (DCF), but implement DCF in a way that almost turns it into a multiples exercise. Confusion reigns with respect to interest tax shields and the weighted average cost of capital (WACC). Higher educational levels do not reduce the confusion. The survey design allows us to control for a respondent’s professional subgroup (e.g., consulting), education, experience, and valuation-purpose characteristics. We find that profession matters more than education; different professions have different valuation cultures. Other factors are less important. The relative unimportance of education raises questions about the role, benefit, and optimal mode of higher level finance education.