The buyer is solely using relative market valuation multiples from weak public comps, which undervalues our specialized niche. How do we leverage the international valuation standards under IVS 105 to force them to include the income approach in our final valuation?

Question

Tyler Smith · Accepted Answer

Buyers often rely exclusively on a market multiple approach using weak comps because it allows them to justify a lower purchase price. However, international valuation standards, specifically IVS 105, clearly state that a proper valuation must evaluate the strengths and weaknesses of multiple approaches, including the Market, Income, and Cost methods. To challenge a weak market-based valuation, you must present a rigorous Income Approach. Using a Discounted Cash Flow analysis or a Capitalization of Earnings method, you project your future cash flows based on your actual operational capacity. Because your business is optimized and highly scalable, your intrinsic economic value will likely far exceed what weak public comps suggest. You can prove the validity of your projections by sharing your EOS V/TO®. The V/TO® shows your three-year picture and one-year plan, backed by a proven track record of hitting quarterly Rocks. This operational discipline provides the reliable information required under IVS 105 to support your income-based valuation. By forcing the buyer's advisory team to comply with professional standards and incorporate the Income Approach, you shift the negotiation back to your true cash-generation capability.