Choose a Valuation Method
Choose the approach whose evidence and assumptions fit the valuation question.
Compare method ranges · illustrative EV in EUR millions
Preview · Illustrative assumptions · No market dataRanges on an EV basis
| Method | EV range | Selected EV |
|---|---|---|
| DCF · Growth | 19–29.3 | 23 |
| DCF · Exit | 17.3–22.1 | 19.6 |
| Trading comps | 17.5–22.5 | 20 |
| Precedents | 22.5–27.5 | 25 |
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Choose an approach before choosing a result
Method selection starts with the business and available evidence, not the answer you want. Ask whether operating cash flows can be forecast, public peers share the relevant economics, and acquisitions provide sufficiently comparable observations. A method with weak inputs can be less useful than a simpler approach with clear evidence.
The company valuation framework covers the full task from purpose to conclusion. This page focuses on choosing methods within that framework. First state whether the required answer is enterprise or equity value so the methods can be compared on a consistent basis.
Use DCF when the operating case can be explained
DCF suits a business whose cash generation, investment and operating risks can be developed explicitly. Its strength is transparency: the analyst can connect value to margins, taxes, reinvestment and growth. Its weakness is dependence on the forecast and long-run assumptions, especially when near-term cash flows contribute little of total value.
The linked DCF model develops cash flow from operating assumptions. If FCFF is already prepared, the direct DCF calculator discounts that supplied forecast. Neither starting point removes the need to justify WACC and terminal value.
Use trading comparables when peers are economically similar
Trading comparables provide a current-market reference from public-company pricing. They are useful when business mix, growth, profitability and risk can be compared, and numerator and earnings periods can be aligned. They reveal market pricing more directly than a stand-alone forecast, but inherit market conditions and peer-selection limitations.
Use comparable-company analysis to inspect the observations. A sector label is not enough. Normalize material accounting differences and distinguish LTM from forecast periods. Negative EBITDA cannot support an ordinary EV/EBITDA comparison merely by retaining the same multiple formula.
Use precedents when transaction context is relevant
Precedent transactions can inform acquisition analysis where the deals share meaningful operating and transaction characteristics. They may contain control, synergy expectations and negotiated financing conditions. Their strength is completed transaction evidence; their weakness is uneven disclosure, limited samples and dates that may no longer reflect the same market environment.
The transaction-multiple guide explains these differences. Do not assume every precedent deserves a uniform premium over trading values. Separate the observed purchase basis from explicit synergy adjustments and investigate the circumstances of each deal.
Use a Football Field to reconcile chosen outputs
A Football Field is a synthesis tool, not a fourth source of intrinsic value. Use it after deriving and reviewing each selected method. The preview shows growth and exit DCF outputs alongside illustrative comps and precedents on a common EV basis. DCF boundaries come from sensitivities; comparable boundaries come from the illustrative observations.
The range-comparison workflow preserves those sources of variation. Give greater weight to stronger evidence rather than averaging every range. Methods can share the same optimistic EBITDA forecast, so apparent agreement does not necessarily provide independent confirmation.
Document exclusions and complementary analysis
Explain why a method is included, omitted or treated as a cross-check. A thin transaction sample may remain useful as context while a mature operating forecast carries the conclusion. A highly uncertain business may require broad cases rather than one tightly estimated result. Retain the assumptions that would change your choice.
The Value module reference documents how selected methods and bases are stored and compared. An LBO analysis can separately test sponsor returns at an assumed purchase price. It answers a financing and investment-return question, not which intrinsic value is automatically correct.
Frequently asked questions
Which valuation method is always best?
None. The appropriate approach depends on the business, purpose, forecast quality and available market or transaction evidence.
Should I average DCF, comps and precedent values?
Only if the weighting can be justified. Explain evidence quality and differences in assumptions before combining outputs.
Is a Football Field another valuation method?
It summarizes valuation ranges already derived by other methods; it does not independently value the company.
When should I use the DCF Calculator?
Use it when annual unlevered cash flows already exist. Use the DCF Model when you need to develop them from an operating forecast.