When might a mean multiple be more appropriate than a median multiple in valuation?

A mean multiple can be more appropriate than a median multiple when dealing with smaller peer groups where there are limited companies. In this context, the mean uses all available data points, which can provide a more comprehensive view of the group's valuation metrics compared to using the median.

In smaller samples, the median may not capture the variation effectively, particularly if the numbers are heavily influenced by a few companies with extreme values. The mean aggregates all values and can provide a better representation of the group as a whole, especially when the sample size is small enough that every data point significantly influences the average.

This is critical in valuation because analysts want to ensure that the valuation reflects the underlying economic realities of the few companies being analyzed, rather than being skewed or misrepresented by the limitations of the sample size affecting the median.