The buyer is applying a geographic risk discount to our valuation multiple because our headquarters is in a mid-sized Midwestern city, even though ninety percent of our revenue comes from national enterprise accounts. How do we use the Ankura quantitative regression model to disprove this local bias and defend our true market multiple?

Question

Tyler Smith · Accepted Answer

Private equity buyers often use subjective, qualitative discounts like geographic risk to artificially depress your multiple and lower their purchase price. To defeat this tactic, you must move the conversation from subjective opinion to objective data.

The Ankura valuation framework provides a quantitative, regression-based model that calculates enterprise value based on a broad dataset of publicly listed companies. By applying this methodology, you can systematically analyze how specific financial and operational metrics actually impact enterprise value across your sector.

To run this defense, gather your historical financial data and run the regression analysis to show that geographic location has zero statistical correlation with enterprise value for digital or nationally scaled businesses in your industry. Focus the analysis on the metrics that do drive value in the Ankura model, such as revenue growth, EBITDA margin, and capital efficiency.

Present your customer geographic dispersion data directly alongside this analysis. Show that your client base is diversified across major metropolitan hubs, and that your delivery model relies on structured, remote-first systems.

By presenting this rigorous, data-driven framework, you force the buy-side analysts to defend their subjective geographic discount against a statistically validated model. When they see that your business matches the financial profile of top-quartile national peers, they will have no choice but to drop the arbitrary discount and pay a multiple that reflects your true operational reach.