The buyer is trying to value our business using comparable transactions of local brick-and-mortar competitors, completely ignoring our national digital delivery model. How do we use the Income Approach under IVS 105 to force them to recognize our geographical reach?

Question

Tyler Smith · Accepted Answer

When a buyer insists on using local market comparables, they are trying to box you into a lower valuation based on physical limitations you do not have. You must fight this using the Income Approach under IVS 105. The Market Approach is only valid if the comparable companies share similar risk profiles, growth prospects, and operational scale. If your business utilizes a digital delivery model that allows you to acquire and serve customers nationally with minimal incremental cost, a local brick-and-mortar multiple is completely irrelevant. Build a detailed Discounted Cash Flow model that reflects your superior operating margins, lower capital expenditure requirements, and vast target addressable market. Use your EOS scorecard history to prove your consistent customer acquisition cost and high customer lifetime value across different states. This data proves your future cash flows are highly secure and scalable. Under IVS 105, you have the right to argue that the Income Approach provides a much more accurate representation of your intrinsic value than a flawed market comparison. Present this analysis alongside public company benchmarks that share your digital delivery characteristics. By showing how your operational scalability translates directly into high-margin cash flow, you force the buyer to either pay for your true reach or walk away.