What criterion should be considered when selecting a valuation method?

When selecting a valuation method, considering a combination of different valuation techniques is a crucial criterion because it allows for a more comprehensive assessment of a company's worth. Different methods, such as discounted cash flow (DCF), comparable company analysis, and precedent transactions, provide varying perspectives on valuation. By utilizing multiple approaches, an analyst can triangulate the value, reducing the likelihood of bias that might arise from relying on a single method.

Incorporating diverse valuation techniques also serves to validate findings, as it creates a means of cross-checking outputs. This practice is especially important in volatile markets or for companies with unique circumstances, where no single method may capture all the relevant factors influencing value. Overall, leveraging a combination of methodologies enhances the robustness and reliability of the valuation process, making it a preferred approach among finance professionals.