in the Exit Multiple Approach. Such analytics result in a terminal value based on operating statistics present in a proven market for similar transactions. This provides a certain level of confidence that the valuation accurately depicts how the market would value the company in reality. On the other hand, the Exit Multiple approach must be used carefully, because multiples change over time. Simply applying the current market multiple ignores the possibility that current multiples may be high or low by historical standards. In addition, it is important to note that at a given discount rate, any exit multiple implies a terminal growth rate and conversely any terminal growth rate implies an exit multiple. When using the Exit Multiple approach it is often helpful to calculate the implied terminal growth rate, because a multiple that may appear reasonable at first glance can actually imply a terminal growth rate that is unrealistic. In practice, academics tend to use the Perpetuity Growth Model, while investment bankers favor the Exit Multiple approach. Ultimately, these methods are two different ways of saying the same thing. For both terminal value approaches, it is essential to use a range of appropriate discount rates, exit multiples and perpetuity growth rates in order to establish a functional valuation range. See also Intrinsic Value Asset retirement obligation Business valuation Cost of capital Net present value PVGO Terminal value (accounting) External links Closure in Valuation: Estimating Terminal Value, Prof. Aswath Damodaran, Stern School of Business Terminal Value (Columbia Business School Research Paper No. 18-12), Prof. Doron Nissim, Columbia Business School References Securities (finance) Fundamental analysis Valuation (finance)