MPEEM and the With-and-Without Method are both income-approach techniques used to value intangible assets, particularly in purchase price allocation. While MPEEM isolates the earnings attributable to a single asset by deducting contributory asset charges, the With-and-Without Method values an asset by comparing the enterprise value with the asset to a hypothetical scenario without it.
Valuation Method
MPEEM vs With-and-Without Method
Comparing MPEEM and the With-and-Without method for valuing intangible assets. When to isolate excess earnings versus model the absence of an asset.
| Criteria | Multi-Period Excess Earnings (MPEEM) | With-and-Without Method |
|---|---|---|
| Methodology | Isolates excess earnings after deducting contributory asset returns | Compares enterprise value with and without the asset |
| Best suited for | Customer relationships, primary income-generating assets | Non-compete agreements, workforce-dependent assets, licences |
| Complexity | High — requires contributory asset charges for every supporting asset | Very high — requires modelling an entire counterfactual business scenario |
| Number of assets valued | One primary asset per application | One asset — measured by total business impact |
| Key assumption risk | Contributory asset return rates | Hypothetical 'without' scenario projections |
| Regulatory guidance | AICPA Practice Aid recommends for primary intangible | Used when asset's absence would fundamentally change business economics |
When to Use Each Approach
Multi-Period Excess Earnings (MPEEM)
- Valuing the primary income-generating intangible asset
- Contributory assets can be identified and their returns estimated
- Customer relationships in an acquisition
- Standard PPA engagement where AICPA Practice Aid applies
With-and-Without Method
- Asset is binary in nature — business model fails without it
- Non-compete agreements where violation would erode value
- Regulatory licences essential to operating
- Asset's value is best understood through its removal impact
Our Verdict
MPEEM is the standard choice for valuing primary intangible assets (especially customer relationships) in PPA. Use With-and-Without when the asset's value is best captured by modelling what happens without it — typically for non-competes, key licences, and workforce-dependent assets.
Related Glossary Terms
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