valuation_market_approach
Market Approach
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Market approach: value from comparable transaction revenue multiples or capitalize a royalty stream into a perpetuity value. Method selects the formula. Use when reliable comparable transactions or royalty rates exist for the subject asset. For income-based excess earnings use valuation_income_methods; for royalty-rate selection and adjustment use valuation_royalty_analysis. Per method: comparable_transactions needs comparables + subject_revenue (optional: adjustments); royalty_capitalization needs revenue + royalty_rate + discount_rate. Each comparable is {revenue, multiple}; comparable_transactions applies the comparable multiple to subject_revenue. Only method is required; all other parameters are method-dependent — supply those the selected method names and omit the rest (defaults apply where defined). Rates and premiums are decimals (0.10 = 10%). Pure arithmetic: no I/O and no external calls, rounded to 2 decimals; parameters belonging to other methods are accepted and ignored. An unknown method, or a missing method-required parameter, returns an error instead of a value.
Input schema
| Property | Type | Required | Description |
|---|---|---|---|
| method | string | yes | Formula to apply. Options: comparable_transactions = Subject revenue times the median comparable multiple.; royalty_capitalization = Value = (revenue * royalty rate) / discount rate. |
| comparables | array | no | Comparable transactions, each {revenue, multiple}. |
| subject_revenue | number | no | Subject company revenue, in currency units. |
| adjustments | object | no | Optional multiplicative adjustments, e.g. {"size": 0.9, "growth": 1.1}. |
| revenue | number | no | Annual revenue attributable to the asset, in currency units. |
| royalty_rate | number | no | Royalty rate as a decimal (0.05 = 5% of revenue). |
| discount_rate | number | no | Per-period discount rate as a decimal (0.10 = 10%). |
Raw JSON schema
{
"type": "object",
"properties": {
"method": {
"type": "string",
"enum": [
"comparable_transactions",
"royalty_capitalization"
],
"description": "Formula to apply. Options: comparable_transactions = Subject revenue times the median comparable multiple.; royalty_capitalization = Value = (revenue * royalty rate) / discount rate."
},
"comparables": {
"type": "array",
"items": {
"type": "object"
},
"description": "Comparable transactions, each {revenue, multiple}."
},
"subject_revenue": {
"type": "number",
"description": "Subject company revenue, in currency units."
},
"adjustments": {
"type": "object",
"description": "Optional multiplicative adjustments, e.g. {\"size\": 0.9, \"growth\": 1.1}."
},
"revenue": {
"type": "number",
"description": "Annual revenue attributable to the asset, in currency units."
},
"royalty_rate": {
"type": "number",
"description": "Royalty rate as a decimal (0.05 = 5% of revenue)."
},
"discount_rate": {
"type": "number",
"description": "Per-period discount rate as a decimal (0.10 = 10%)."
}
},
"required": [
"method"
]
}