Intangible Asset Valuation

Market Approach

valuation_market_approach

Read-onlyIdempotent

Calculate intangible asset value from comparable transaction revenue multiples or by capitalizing a royalty stream into perpetuity.

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; 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

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).
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

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

A5/5.0

Behavior5/5

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

Annotations already declare read-only, idempotent, non-destructive, and closed-world behavior. The description adds that the tool is pure arithmetic with no I/O or external calls, returns values rounded to 2 decimals, ignores parameters belonging to other methods, and errors on unknown methods or missing required method parameters. No contradiction with annotations.

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

Conciseness5/5

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

The description is dense but front-loaded and structured: purpose, usage condition, alternatives, per-method parameters, and behavioral notes. Every sentence contributes necessary invocation context, and the length is justified by the tool's method-dependent complexity.

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?

Annotations and an output schema are present, and the description still supplies method selection, parameter mapping, ignored-parameter behavior, and error conditions. It is complete enough for an agent to call the tool correctly without opening the schema.

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 already 100%, but the description adds method-dependent conditional semantics: comparable_transactions needs comparables plus subject_revenue, royalty_capitalization needs revenue plus royalty_rate and discount_rate, each comparable is {revenue, multiple}, and other method parameters are accepted and ignored. This meaningfully extends beyond the field-level schema descriptions.

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 function: market approach using comparable transaction multiples or royalty capitalization, with the method selecting the formula. It explicitly distinguishes itself from valuation_income_methods and valuation_royalty_analysis, so the agent can identify scope and sibling boundaries.

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: reliable comparable transactions or royalty rates exist. It also names the alternative tools for income-based excess earnings and royalty-rate selection, and spells out the per-method parameter requirements.

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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