Intangible Asset Valuation

Market Approach

valuation_market_approach

Read-onlyIdempotent

Calculate intangible asset value from comparable transaction multiples or by capitalizing a royalty stream. Use when reliable comparables or royalty rates exist for the subject asset.

Instructions

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

TableJSON Schema

Name	Required	Description
`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

TableJSON Schema

Name	Required	Description
`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).
`defaults_applied`	No	Optional parameters that were not supplied, so their documented defaults were used.
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

Changed1 schema field changedv2.1.1Oct 2, 2026

addedOutput schema / properties / defaults_applied

Added value: +{
+  "description": "Optional parameters that were not supplied, so their documented defaults were used.",
+  "items": {
+    "type": "string"
+  },
+  "type": "array"
+}

Changed2 schema fields changedv0.1.4Sep 30, 2026

changedOutput schema / properties / steps / description

Previous value: -"Intermediate calculation steps for traceability."New value: +"Intermediate calculation steps for traceability (one string per step)."

removedOutput schema / properties / steps / items / type
```
Removed value: -"object"
```

First observedv0.1.0Sep 30, 2026

TDQS

A4.9/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already declare readOnly/idempotent/openWorld=false, but the description adds genuinely new behavior: pure arithmetic with no I/O, rounding to 2 decimals, cross-method parameters accepted and ignored, and error semantics (unknown method or missing required param returns an error instead of a value). That is exactly the beyond-annotation context this dimension rewards.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Front-loaded with the core purpose, then alternatives, then per-method parameter rules and behavioral notes. Dense but no sentence is wasted; the length is justified by two distinct formulas and seven method-dependent parameters.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

A mutation-free, output-schema-backed arithmetic tool: the description covers formulas, parameter routing, units, rounding, ignored parameters, defaults, and error behavior. Nothing an agent needs to invoke it correctly is missing.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters5/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the baseline is 3, but the description goes further by mapping which parameters each method requires (comparable_transactions: comparables + subject_revenue; royalty_capitalization: revenue + royalty_rate + discount_rate), noting only method is required, explaining the {revenue, multiple} comparable shape, and restating the decimal convention. This resolves the method-dependent ambiguity the schema alone leaves open.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

States a specific valuation method with the two formulas (comparable transactions multiples vs. royalty capitalization), and explicitly names the sibling tools that handle adjacent concerns (valuation_income_methods, valuation_royalty_analysis). An agent can distinguish this from its many valuation siblings without opening schemas.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Gives an explicit when-to-use condition ('when reliable comparable transactions or royalty rates exist') and routes two nearby cases to named alternatives. This is the when/when-not/alternative pattern at full strength.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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