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DCF vs comparables, explained for business owners

BY VIENTIA ADVISORY · LAST CHECKED 1 SEP 2026 · 7 MIN READ

Before you read: every business is different, and this article explains general method, not advice for your case. For a number or a plan you can act on, message us - real answer within 48 hours.
THE SHORT ANSWER

DCF asks what your future cash is worth. Comparables ask what the market pays for businesses like yours. DCF is precise but built on assumptions; comparables are grounded but never truly comparable. Use both, trust the overlap.

The two lenses

DCF: the microscope

  • Models YOUR business, not the average
  • Every assumption visible and challengeable
  • Sensitive to growth and discount rate
  • Best when the future differs from the past

Comparables: the mirror

  • Anchored to real market prices
  • Fast sanity check
  • The "comparable" never quite is
  • Needs 30-50% discounts for small private firms

Where each one lies to you

DCF lies through assumptions. Nudge growth from 5% to 8% and shave two points off the discount rate, and the value can double. That is why a serious model shows sensitivity: what happens to the number when each assumption moves.

Comparables lie through the sample. A listed Thai company is liquid, audited and diversified. Your private business in Laos is none of those. Applying its multiple without a heavy discount flatters your value and fools nobody who matters.

SAME BUSINESS, DIFFERENT ASSUMPTIONS - ILLUSTRATIVE DCF SWING
Cautious assumptions
$550k
Base case
$750k
Optimistic assumptions
$1.0m

Illustrative. Assumptions move value more than arithmetic does. Demand the sensitivity table.

How we use them together

We build the DCF first, from your real numbers. Then we pull regional comparables, discount them honestly, and lay the two ranges side by side. Where they overlap is the defensible range; where they diverge tells us which assumption to interrogate. You receive both in the Excel model, with the full logic open.

Common questions

Which valuation method is best for a small business?

No single method. DCF captures your specific future; comparables anchor it to reality. A serious valuation runs both and trusts the overlap.

What discount rate applies to a business in Laos?

Higher than in developed markets. Country risk, currency risk and small-company risk stack on top of base rates, which lowers value compared to the same business elsewhere.

Why do valuations of the same business differ so much?

Because assumptions differ. Growth, margins and the discount rate drive the number. Always ask to see the assumptions, not just the result.

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