The buyer's broker is using simple local multiples, but we want to build a regression-based model under IVS 105 using public company data to prove our tech-enabled service business deserves a premium. How do we select the right comparable companies without the buyer throwing out the analysis as irrelevant?

Question

Tyler Smith · Accepted Answer

Brokers love local transaction multiples because they are easy to calculate, but they ignore the scalability of tech-enabled operations. To use a regression-based model under IVS 105, you must bridge the size gap between your mid-market business and large public companies.

Start by selecting public comparables that share your operating characteristics, not just your industry code. Look for companies that leverage similar automated workflows, have comparable customer retention rates, and show a similar margin profile. Once you have this peer group, apply a size discount to your model to account for liquidity and scale differences.

A proper regression model will plot enterprise value against key operational metrics like EBITDA margin and revenue growth rate. This mathematical approach proves that as operating efficiency increases, the multiple increases exponentially. If your margins are double the industry average, the regression model proves your premium is mathematically justified.

Review this valuation model with your leadership team during your quarterly meeting. Make sure your Integrator can defend the underlying data points. When you present this model to the buyer, you are shifting the conversation from a subjective negotiation to an objective, data-driven analysis. It makes it incredibly difficult for the buyer to push a lowball local multiple when the quantitative data under IVS 105 proves otherwise.