Guideline Transaction Method

A market approach valuation technique that estimates the value of a subject company by reference to the trading multiples of publicly listed companies with similar business characteristics. The method involves identifying comparable public companies, selecting appropriate valuation multiples (such as EV/EBITDA or P/E), making adjustments for differences in size, growth, risk, and marketability, and applying the adjusted multiples to the subject company's financial metrics.

A valuation methodology that estimates a company's value by analysing the prices paid in comparable M&A transactions. Precedent transactions incorporate control premiums and strategic value that may not be captured in public market comparables.

A valuation approach that estimates the value of a business by adjusting the book values of all assets and liabilities to their fair values, including the recognition of off-balance-sheet intangible assets that meet IFRS 3 or ASC 805 recognition criteria. The adjusted net asset method is primarily used for asset-holding companies, investment vehicles, and businesses where value resides primarily in the asset base rather than earnings capacity.

A technique for estimating the weighted average cost of capital by constructing the cost of equity from individual risk components rather than deriving it solely from market data. The build-up method typically starts with the risk-free rate and adds an equity risk premium, size premium, industry risk premium, and company-specific risk premium.

A widely used income-based valuation technique that estimates the value of an intangible asset by calculating the present value of hypothetical royalty payments that the owner is relieved from paying by virtue of owning the asset. The method is commonly applied to value trademarks, patents, technology, and trade names in both transaction and financial reporting contexts.

A cost-based valuation approach that estimates the value of an intangible asset by calculating the current cost of creating or acquiring a substitute asset with equivalent utility. The replacement cost method is frequently used for valuing assembled workforces, proprietary software, and databases, adjusted for any functional or economic obsolescence.

A valuation technique that estimates the value of an intangible asset by comparing the projected cash flows of a business with the asset to those without it. The difference in present value represents the asset's contribution and is commonly used to value non-compete agreements, assembled workforces, and technology assets.

A valuation technique used to isolate the value of a specific intangible asset by deducting the returns attributable to all other assets (tangible and intangible) from total earnings. The multi-period excess earnings method is the most common approach for valuing customer relationships and technology in purchase price allocations.