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Financial Analytics: Science and Experience
 

Modern techniques for the comparative method of business valuation

Vol. 14, Iss. 1, MARCH 2021

Received: 12 October 2020

Received in revised form: 28 October 2020

Accepted: 16 November 2020

Available online: 26 February 2021

Subject Heading: ASSESSMENT AND APPRAISAL ACTIVITIES

JEL Classification: G32

Pages: 44–64

https://doi.org/10.24891/fa.14.1.44

Semen Yu. BOGATYREV Financial University under Government of Russian Federation, Moscow, Russian Federation
sbogatyrev@fa.ru

https://orcid.org/0000-0002-6080-5869

Subject. The article investigates the modern implementation of the comparative approach to appraising the business value via new technologies and software applications.
Objectives. Analyzing key issues of the comparative approach theory, I demonstrate capabilities of modern IT systems in terms of valuation. The study presents what may be used to overcome the imperfection of the classical framework for the comparative valuation, unveil the substance of new techniques for applying ordinary methods of the comparative valuation.
Methods. The article is based on key classical elements of the comparative approach theory via new software and IT environments. I also present principles of the comparative approach theory, its logical sequence and argumentation. The article shows the nexus with new technological components of modern IT systems.
Results. I reveal the substance of key modern methods to implement the comparative approach theory in the time of the digital economy and Big Data. The article scrutinizes the main elements of the comparative approach theory in terms of their contemporary interpretation and use in the post-COVID-19 economy. I showcase methods to use comparative approach methods in modern IT and analytical systems.
Conclusions and Relevance. As the use of IT systems shows, raw data are now more easily collected and processed, which is needed for valuation purposes, when they are handled by financial analysts and financial statements are normalized. The findings are applied by today's appraisers, valuation and fundamental analysts. The use of modern valuation methods supplements and amplifies the classical valuation framework and enhances the quality of valuation.

Keywords: comparative method, precedent transaction method, equity capital market, comparable company analysis, multipliers

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