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Article 18
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An expert shall take the following into account if it adopts the market approach:
- a comparable company or comparable transaction selected shall share similar metrics and a high risk association with the object under review. Lack of sufficient comparability necessitates a necessary adjustment. Factors to be evaluated in the selection of a comparable case include:
- similarity to the object under review, including in terms of quality and quantitative.
- quantity, verifiability, time effectiveness, and relevance of the comparable data.
- the price of the comparable transaction shall be that of an arm’s length transaction.
- The following shall be factored in in the selection, calculation, and adjustment of a value multiple:
- apply valuation multiples which can reasonably estimate the value of the object under review.
- a consistent basis and calculation method shall be employed in regard to valuation multiples used for comparison.
- evaluate the appropriateness and reliability of the comparable company or comparable transaction.
- identify factors that may affect the value of the object under review, assess and analyze each of them against the comparable company or comparable transaction to be drawn on, and, where necessary, adjust the reference valuation multiples or transaction price by the features of the object under review.
- provide reasonable data in support of a premium or discount.
- conduct a sensitivity analysis of any change to an assumption of a key input value where necessary.
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