Understanding how the maturity stage of a business influences the choice of valuation methods is crucial for accurate and relevant assessments. Different stages of maturity present unique characteristics and risks, which necessitate tailored valuation approaches.
This guide will walk you through the appropriate valuation methodologies for each stage of business maturity, helping you choose the best method for your valuation object.
Maturity Stages and Appropriate Valuation Methods
The following tables provide a comprehensive overview of which valuation methods are most suitable for different stages of a business’s maturity.
Income Based Methodologies
Maturity of valuation object |
| DCF simplified | Dynamic WACC | APV | FTE | DDM | Cap. earnings |
Concept |
| x |
| x |
|
|
|
Startup |
| x |
| x |
|
|
|
Scale-up / Growth |
| x |
| x |
|
|
|
Mature: Private |
| x | x | x | x | x | x |
Mature: Public |
| x | x | x | x | x | x |
Restructuring |
| x | x | x | x | x | x |
Liquidation |
| x | x | x | x | x | x |
Trading Comps Methodologies
Maturity of valuation object |
| EV/Sales | EV/EBITDA | EV/EBIT | P/E |
Concept |
| x |
|
|
|
Startup |
| x |
|
|
|
Scale-up / Growth |
| x |
|
|
|
Mature: Private |
|
| x | x | x |
Mature: Public |
|
| x | x | x |
Restructuring |
| x | x | x |
|
Liquidation |
| x | x | x |
|
Transaction Comps Methodologies
Maturity of valuation object |
| EV/Sales | EV/EBITDA | EV/EBIT | P/E |
Concept |
| x |
|
|
|
Startup |
| x |
|
|
|
Scale-up / Growth |
| x |
|
|
|
Mature: Private |
| x | x | x | x |
Mature: Public |
|
|
|
|
|
Restructuring |
| x | x | x |
|
Liquidation |
| x | x | x |
|
Other Methodologies
Maturity of valuation object |
| VC Method | LBO |
Concept |
| x |
|
Startup |
| x |
|
Scale-up / Growth |
| x |
|
Mature: Private |
|
| x |
Mature: Public |
|
| x |
Restructuring |
|
| x |
Liquidation |
|
| x |
You may also be interested in our Whitepaper on How to choose Valuation Methods