Revaam Model Applied to Multiple Valuation Comparison Among Different World Regions

This paper uses the REVAAM Model used to calculate adjusted multiples, through multiple linear regression, used commonly in valuating companies such as the Price Earnings (PE) and/or the Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA). For this paper, we used REVAAM to calculate historical adjusted multiples for eight regions in the world: Africa, Asia, Western Europe, Eastern Europe, Latin-America and the Caribbean, Middle East, Oceania and United States & Canada; all the World; and the BRIC group (Brazil, Russia, India and China). We show the yearly obtained multiples, as well as the long term multiples for each region and compared them. During our analysis, we found that although emerging markets do show higher multiples, these are converging towards mature market multiples. When we compare long term multiples to those for each year we can distinguish differences that could be consider bubbles due to speculation and to fundamentals (profitability factors).