Use of the Relative Valuation Technique on Business Discussion
After your investigation into using DCF, you and your partner decided to look at different valuation projection approaches, and you discovered the relative valuation technique. You are gathering information about this technique and your initial research focus is on the below questions and activities. Analyze the relative valuation technique. Why is the relative valuation approach so widely used? Are you comfortable using this approach to value a business? Why or why not?
As you develop your response, focus on the following information (you are encouraged to go beyond the text for information):
- What are some limitations and investment community objection to this technique that make you uncomfortable?
- If you like this technique, how will you defend its use?
- Offer us a link to a video or an article that complements your answer to the items above.