The buyer is trying to apply subjective qualitative discounts to our multiple, claiming our automated delivery model carries too much technology risk. How do we use the Ankura regression-based model to prove our multiple should be based on objective financial performance rather than their subjective risk adjustments?

Question

Tyler Smith · Accepted Answer

Buyers love to use terms like technology risk or platform uncertainty to justify knocking two or three turns off your valuation multiple. These qualitative discounts are highly subjective and usually designed to see how much money you are willing to leave on the table. To defeat this tactic, you must shift the valuation framework from subjective opinions to a quantitative, regression-based model like the Ankura framework. This model utilizes a comprehensive dataset of publicly listed companies to analyze how specific financial metrics actually correlate with enterprise value. It strips away the emotional bias of the buy-side diligence team and replaces it with mathematical reality. By inputting your actual performance metrics, such as your capital efficiency, operating margins, and revenue growth, into this regression model, you can demonstrate that businesses with your exact financial profile command a specific, higher multiple in the open market. This allows you to argue that your automated operations deserve a premium, not a discount, because they deliver superior margins with less capital. Under IVS 105, you have the right to challenge subjective valuation methods by presenting reliable, market-derived data. Using a data-driven framework forces the buyer to argue against mathematical correlations rather than their own vague apprehensions, preserving your multiple and protecting your hard-earned valuation.