Valuation method

Comparable transactions

Comparable transactions ground a valuation in what has actually been paid. The difficulty is that in this segment the data is thin, and the comparisons are rarely as close as they look.

What counts as comparable

Same sector is not enough. A useful comparison matches size, margin structure, channel mix, degree of owner involvement and the structure of the transaction itself.

Two businesses with identical turnover can be a world apart: one selling own-brand products at high margin through search, the other reselling third-party goods on a single marketplace.

Reading reported figures

Reported transaction values often include deferred elements and earn-outs that may never be paid. A figure quoted as a headline is not the same as the amount received.

Where the structure is not disclosed, a comparison should be treated as indicative at best.

Practical use

Comparables work best as a boundary check on a valuation produced by another method. If a multiple falls far outside the observed range for similar businesses, there should be a specific and statable reason.

Where no such reason exists, the assumption behind the calculation deserves a second look.

All valuation methods