Valuation Methodology
Market Approach
Valuation techniques grounded in observed market evidence—using comparable company trading multiples and precedent transactions to benchmark value.
What the Market Approach Answers
The market approach provides a “what would the market pay?” view of value. It is powerful when good comparables exist and when market pricing reflects the risk, growth, and profitability characteristics relevant to the subject business.
Primary Methods
- Guideline Public Company Method: Benchmark against trading multiples of similar companies
- Precedent Transactions: Reference acquisition multiples paid for comparable targets
Key Steps That Drive Quality
- Peer selection: Business model, end markets, size, and growth profile alignment
- Metric normalization: Non-recurring items, seasonality, and accounting differences
- Multiple selection: LTM vs. forward, revenue vs. earnings, and outlier treatment
- Control and liquidity: Trading vs. control values and context-dependent adjustments
Common Pitfalls We Avoid
- Using “close enough” comps that don’t match the subject economics
- Mixing time periods without adjusting for market regime changes
- Over-relying on headlines without understanding deal structure and conditions
- Ignoring size, growth, and margin differences that warrant valuation dispersion
How We Make It Useful
We connect market multiples back to business drivers and triangulate indications of value rather than treating multiples as a black box.
Need Strong Comparable Evidence?
We can build peer sets and transaction comps that support defensible conclusions.