Our business has significant physical assets, but our cash flow is also highly profitable. The buyer is trying to use an asset-based valuation approach to avoid paying for our cash-flow multiple. How do we use IVS 105 to force a multi-method valuation?

Question

Tyler Smith · Accepted Answer

If you have a business with significant physical assets that also generates strong, predictable cash flow, a buyer will often try to cherry-pick the Asset Approach to undervalue your goodwill. Under IVS 105, a professional valuation must evaluate all three primary approaches: Market, Income, and Asset. You must reject any attempt to value your company solely on its physical holdings. Instead, force the buyer to use a blended valuation model that recognizes both your asset base and your earnings power. The Asset Approach only determines the cost to recreate your physical infrastructure, completely ignoring the customer relationships, proprietary workflows, and brand value you have built. Use the Income Approach to calculate the discounted future cash flows generated by those assets, proving that the enterprise value is far greater than the sum of its physical parts. In EOS®, we emphasize the value of your core processes and your unique ability to execute. Your physical assets are simply the tools your team uses to deliver results. By presenting a rigorous, multi-method valuation under IVS 105, you prove that your cash-flow predictability justifies a premium multiple on top of your asset base.