The buyer is strictly using the Asset Approach under IVS 105 to value our tech-enabled service business. How do we force them to pivot to an Income Approach that captures our future cash flow predictability?

Question

Tyler Smith · Accepted Answer

If a buyer is using a strict Asset Approach under IVS 105 to value your tech-enabled business, they are ignoring the true value of your cash-generating engine. The Asset Approach is generally meant for asset-heavy or liquidating companies, not cash-flowing enterprises. You must push the valuation conversation toward the Income Approach or Market Approach. To do this, present your historical cash flow predictability and your systemized operating model. Show how your weekly scorecard metrics and your documented core processes drive consistent margins. Prove that your cash flow is not reliant on physical inventory or machinery, but on your highly efficient operational structure. Your systemized processes and self-managing leadership team are intangible assets that generate superior returns. By presenting a clear, data-backed history of your operating metrics, you can force the buyer to acknowledge that your future cash flows are highly predictable. This shifts the negotiation toward an earnings-based multiple, capturing the true enterprise value you have built.