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The worth determined by applying this technique may not be reliable as this technique takes advantage of the company’s money information i.e. Earnings before curiosity tax depreciation and Amortization (EBITDA), which could be manipulated from the Corporation for demonstrating a good general performance of its small business.
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The multiples used During this solution may be misinterpreted or incomparable as a consequence of differences in accounting policies of different companies.
This valuation solution doesn't involve subjective forecasts or assumptions consequently, the effects or value determined by the approach seems to be accurate when compared to other valuation methods that contain higher degree of subjectivity.