The buyer has calculated three wildly different valuations using the Income, Market, and Asset approaches, and is now trying to cherry-pick the lowest number. How do we use IVS 105 standards to force a fair reconciliation of these valuation methods?

Question

Tyler Smith · Accepted Answer

When a buyer attempts to cherry-pick the lowest valuation from different methodologies, you must hold them to international valuation standards. Under IVS 105, a valuer must perform a structured reconciliation process, evaluating the strengths and weaknesses of each approach to arrive at a single, consistent conclusion of value.

You must systematically reject the inappropriate methods. If your business is an operating company with strong, positive cash flows, the Asset Approach is entirely inappropriate and should be discarded. The Asset Approach is typically reserved for liquidation or asset-heavy holding companies, not operating businesses.

Next, evaluate the reliability of the Market and Income approaches based on data quality. If you have highly reliable, market-observed transaction data of similar automated businesses, the Market Approach is strong. If your business has unique automated workflows that are not captured in generic market multiples, the Income Approach using a discounted cash flow method is far more accurate.

Force the buyer to document their reconciliation logic as required by IVS 105. Show how weighing the approaches fairly, rather than averaging them or picking the lowest, reflects the true economic value of your business. This standard-based negotiation prevents them from using arbitrary discount tactics to devalue your company.