The buy-side advisory firm is using depressed public company multiples to value our high-margin, tech-enabled services business. How do we use the Guideline Transaction Method under IVS 105 to force them to use actual private transaction multiples of automated businesses?

Question

Tyler Smith · Accepted Answer

Public company multiples are rarely a fair comparison for agile, mid-market businesses. Public markets value companies based on liquid, highly regulated stock prices that do not reflect the premium paid for control of a private, operationally efficient company. To counter this, anchor your valuation negotiations in the Guideline Transaction Method under the IVS 105 Market Approach. This method focuses on actual transactions involving the sale of similar private companies. Work with your advisory team to compile a robust peer group of recent private M&A deals where strategic buyers paid a premium for proprietary technology or automated delivery models. Present this data alongside your normalized operational metrics. Show how your automated workflows and AI-driven efficiency deliver superior EBITDA margins compared to the public comps the buyer is using. Highlight that your systems require less working capital and scale faster. By shifting the focus to private transactions under IVS 105, you establish a more accurate market standard for what strategic buyers actually pay for operational leverage. This forces the buy-side firm to abandon irrelevant public indexes and defend why they are discounting a business that clearly outperforms its private peers.