The buyer is valuing us on a basic industry multiple, but our automated workflows and proprietary delivery model yield far higher margins than our peers. How do we use the IVS 105 market and income approaches to force them to pay for this operational leverage?

Question

Tyler Smith · Accepted Answer

Buyers love to use generic, peer-group multiples because it keeps their acquisition costs low. If you let them paint your business with a broad industry brush, you are leaving millions on the table. You must challenge their baseline assumptions by utilizing the structured framework of IVS 105.

Under the IVS 105 income approach, valuation is based on expected future cash flows and economic benefits. If your proprietary automated workflows allow you to scale without adding head count, your future margins will expand far faster than a typical competitor. Build a capitalized earnings model that projects these automated efficiencies. Prove that a dollar of your revenue is worth more because it costs you less to deliver.

Simultaneously, apply the IVS 105 market approach to reframe your peer group. Do not compare your company to low-tech, manual services businesses. Find comparable transactions of tech-enabled platforms or software-adjacent firms. Compare financial metrics like growth rates, customer retention, and EBITDA margins. Use this data to show that your operational efficiency places you in a premium tier that commands a higher multiple.

By combining these valuation approaches, you shift the conversation from a subjective negotiation to an objective math problem. Show them that they are not just buying a customer list, they are buying a highly scalable cash engine.