By JK Capital | August 12, 2026
Valuation is the exercise of estimating what a company is worth. There is no single, definitive figure, but a range, built from explicit assumptions about earnings, risk and growth. Anyone asking how to calculate the valuation of a company is usually one step away from a concrete decision: selling control, bringing in a partner, buying a competitor or raising capital.
In Brazilian market practice, three approaches account for almost all the work: multiples of comparable companies, multiples of precedent transactions and discounted cash flow. Rather than competing, they are used together, to test through independent routes whether the value range holds.
The main valuation methods
| Method | How it works | When it makes most sense |
|---|---|---|
| Comparable company multiples | Applies to the company's earnings, usually EBITDA or revenue, the multiple observed in listed companies in the same sector. | Sectors with comparable listed peers and recurring results. |
| Precedent transactions | Uses multiples paid in M&A deals in the sector, which already embed a control premium and synergies. | Sale of control, where there is a track record of deals in the segment. |
| Discounted cash flow (DCF) | Projects free cash flow over the coming years and discounts it to present value at a rate reflecting the risk of the business. | Companies with credible projections, long-term contracts or a defined investment cycle. |
From the multiple to shareholder value
A frequent mistake is confusing the value of the company with the value that reaches the shareholder. The multiple applied to EBITDA produces enterprise value. To reach equity value, what the seller actually receives, you deduct net debt, probable contingencies, working capital outside the normal range and other adjustments negotiated in the contract.
That is why two companies with the same EBITDA can receive very different offers. Revenue predictability, client concentration, dependence on the owners, accounting quality and liabilities found in due diligence move price as much as the year's result does.
What most influences valuation in a negotiation
- 1
Quality of financial information
Consistent statements, management accounts that reconcile with statutory accounts and a defensible adjusted EBITDA reduce the risk discount. When the buyer cannot audit the number, they protect their own cash with holdbacks and adjustment clauses.
- 2
Predictability and recurrence
Long-term contracts, a diversified client base and low seasonality support higher multiples, because they reduce the uncertainty of the projection feeding the DCF.
- 3
Dependence on key people
If the company depends on the founder to sell, price or retain clients, part of the value shifts to retention clauses and earn-outs instead of upfront price.
- 4
Liabilities and contingencies
Tax, labour and regulatory issues mapped in advance become a negotiated assumption. Discovered late, they become a discount.
- 5
Competition in the process
Value is also a function of alternatives. A structured process, with more than one qualified buyer looking at the same opportunity, is what turns a technical appraisal into a real price.
Valuation is not a number in isolation
At JK Capital, valuation is built together with the reading of the sector, the comparables that actually apply and the strategy for approaching buyers, because it is the combination of the three that sustains the value range in front of whoever is going to pay for it. Knowing that range before deciding anything gives the owner time to choose calmly, and time is what best preserves alternatives.
This content is informational and does not constitute investment advice, a formal appraisal or an offer. Every transaction requires specific analysis.