In some ways it should be a combination of simple EBITDA...

In some ways it should be a combination of simple EBITDA multiple, then whatever premium or discount one decides to apply for whatever factors one values.

MJS,

I couldn't disagree more on the above statement. EBITDA multiples are rubbish IMO. Yes I know the analyst community uses them (I used to be part of the analyst community) but if you use that as a justification as to why we should use EBITDA multiples (not saying you would), then you have to ask why the analyst community gets it wrong as often as they get it right.

I look at return on equity (after all if you own shares in a business you are an equity holder) and look at the portions of profits reinvested and paid out as dividends and project it 12 months forward in the context of the outlook for the business. That is it in a nutshell but there is more to it than that. It is an approach adopted from a book called:

MARKET WISE Discover the secrets of value investing by Brian McNiven.

It is in large part where Roger Montgomery has derived his approach from and is the basis for a lot of his book Valuable

I also don't hang my hat on just one valuation because as you know with any method, if you put garbage in you get garbage out, so I look at a range of valuations based on a range of assumptions. Currently my range extends from $0.19 - $0.29 for BGL with my 'base case' at around 23 -24 cents.