Market Approach
valuation_market_approachMarket 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; other parameters are method-dependent, so supply those named for the selected method and omit the rest (documented defaults apply where defined). Pure arithmetic: no I/O and no external calls, and numeric results are returned rounded to 2 decimals. Parameters belonging to other methods of this tool are accepted and ignored. Supplying an unknown method, or leaving unset a parameter that the chosen method requires, returns an error instead of a value.
Input Schema
| Name | Required | Description | Default |
|---|---|---|---|
| method | Yes | Formula to apply. Options: comparable_transactions = Subject revenue times the median comparable multiple.; royalty_capitalization = Value = (revenue * royalty rate) / discount rate. | |
| revenue | No | Annual revenue attributable to the asset, in currency units. | |
| adjustments | No | Optional multiplicative adjustments, e.g. {"size": 0.9, "growth": 1.1}. | |
| comparables | No | Comparable transactions, each {revenue, multiple}. | |
| royalty_rate | No | Royalty rate as a decimal (0.05 = 5% of revenue). | |
| discount_rate | No | Per-period discount rate as a decimal (0.10 = 10%). | |
| subject_revenue | No | Subject company revenue, in currency units. |
Output Schema
| Name | Required | Description | Default |
|---|---|---|---|
| error | No | Error message when the call fails. | |
| steps | No | Intermediate calculation steps for traceability (one string per step). | |
| value | Yes | Computed valuation, rate, or metric. | |
| method | No | Formula / method name that produced the result. | |
| assumptions | No | Modelling assumptions applied (list of strings or key/value object). | |
| formula_reference | No | Mathematical formula or reference applied. |