There is some "confusion" in the industry about the difference between a "valuation" and an "appraisal".
Valuation:A radio station valuation is commonly expressed as Fair Market Value (“FMV”).
FMV is generally defined as the cash, or cash equivalent, price for which a property would change hands between a willing buyer and a willing seller in an arms length transaction, both being adequately informed of the relevant facts, and neither being compelled to buy or sell. In the absence of an actual sale, Fair Market Value may be estimated using industry accepted guidelines.
The FMV of a radio station uses one, or more, of these metrics:
Operating Income
Cash Flow
Broadcast Cash Flow
EBITDA
Population Covered by Standard Contour
Multiple of Revenue
Appraisal:An Appraisal is an estimate of the market value of property, usuallyreal estate. It does not consider the value ofoperating incomefrom the property. Physical assets such as buildings or land rarely comprise a significant portion of a radio station's fair market value.