The buy-side analyst is using the Guideline Transaction Method to price us based on distressed sales in our sector from two years ago. How do we use IVS 105 principles to force them to use current public market comps adjusted for our growth?

Question

Tyler Smith · Accepted Answer

If a buyer tries to drag your valuation down by using the Guideline Transaction Method with outdated or distressed comparables, you must challenge their methodology. Under IVS 105, any valuation approach must use reliable and relevant market data that reflects current market conditions and the true nature of the asset. Begin by systematically disqualifying their comps. Prove that those historical transactions involved distressed businesses, different geographic markets, or fundamentally weaker operating models. Distressed sales do not represent fair market value. Next, force the buyer to use the Guideline Public Company Method or the Income Approach. Use these methods to benchmark your financial metrics against healthy, high-performing peers. To justify a premium multiple, show how your operational metrics outpace the industry average. Present your EOS scorecard and V/TO® to show consistent double-digit growth, higher gross margins, and lower customer churn than the generic companies they are trying to use as comparables. By aligning your superior performance with the standards of IVS 105, you demonstrate that your business deserves a valuation based on its actual strength, not the misfortunes of your weakest competitors.