Is the Arithmetic or Harmonic Mean the Best Valuation Estimate?

Abstract

A rigorously justifiable procedure to calculate a group multiple based on multiples of separate members of the group does not exist. Academicians and practitioners use the arithmetic mean, harmonic mean, and median to calculate valuation multiples for various industries and sectors of the economy. This article offers a criterial interpretation of the arithmetic and harmonic means and considers the group multiple problem as decision making based on the criterial approach.