A 6x EBITDA multiple is reasonable in one industry and indefensible in another. What follows is how we think about value drivers, and what we test hardest, in the sectors we work in most.
Recurring revenue changes everything about how value is built — and how easily it can be overstated.
What drives value: net revenue retention, gross margin after hosting and support, CAC payback, the shape of the cohort curve, and contracted versus renewable ARR.
What we test hardest: whether ARR is genuinely contracted, how churn is defined, whether implementation revenue is being counted as recurring, and whether the forecast sales efficiency has ever actually been achieved.
Asset-heavy businesses where the balance sheet matters as much as the earnings statement.
What drives value: capacity utilisation, order book quality, working-capital cycle, replacement cost of plant, customer concentration and input-price pass-through.
What we test hardest: maintenance versus growth capex in the forecast, whether land carried at historical cost distorts NAV, and the realism of a margin expansion that assumes volume nobody has ordered.
Regulated revenue, long approval cycles and intangibles that dominate the asset base.
What drives value: occupancy and case mix for providers; ANDA/DMF pipeline, market exclusivity and regulatory approvals for pharma; payor mix and doctor retention for clinics.
What we test hardest: probability-weighting of pipeline assets, whether key-doctor dependence has been treated as a discount, and the durability of pricing under policy change.
Where enterprise-value logic breaks down and equity-value methods take over.
What drives value: net interest margin, cost of funds, credit cost through the cycle, capital adequacy, AUM growth and the quality of collections infrastructure.
What we test hardest: whether provisioning reflects the actual vintage curve, the sustainability of a low cost of funds, and whether the book has been seasoned long enough to mean anything.
Brand equity is real, but it is the hardest intangible to value honestly.
What drives value: contribution margin after fulfilment and returns, repeat rate, blended CAC across channels, channel concentration, and inventory turns.
What we test hardest: whether growth is bought rather than earned, the true return rate net of exchanges, and marketplace dependence that could reprice overnight.
Project-level cash flows, long horizons and an asset base that dominates the valuation.
What drives value: approvals status, saleable area, absorption rate, construction-cost inflation, and for annuity assets, concession tenure and counterparty credit.
What we test hardest: optimistic absorption assumptions, the treatment of unsold inventory, and whether land is at cost or market. Land and building components are valued by a Registered Valuer in that class, integrated into our report.
People-dependent businesses where the assets go home every evening.
What drives value: utilisation, bill rate, pyramid structure, client concentration, contract renewal terms and attrition.
What we test hardest: whether the promoter is the business, how much revenue would survive their departure, and whether margin gains come from genuine leverage or from underpaying the pyramid.
Layered ownership, cross-holdings and the discounts nobody wants to discuss.
What drives value: the value of underlying investments, control versus minority position, dividend policy, and the tax leakage from moving value up the chain.
What we test hardest: holding-company discount, discount for lack of marketability, and whether related-party balances are genuinely recoverable.
We will tell you which approach fits, what data we will need, and how long it will take.