Which valuation method usually gives the highest value, and why?

There's no method that always comes out highest, but there is a usual order. Precedent transactions usually give the highest value. Those are prices buyers paid for whole companies, so they include a control premium. Trading comps come out lower because a share price is what a minority investor pays for a small stake with no control. The DCF is the one that can land anywhere. It depends on my own assumptions, mainly the growth rate, the margins, the discount rate and the terminal value. With optimistic projections it can be the highest of all, and with cautious ones it can be the lowest. An LBO analysis usually gives the lowest value, so people treat it as a floor. A private equity buyer needs to earn its target return, and that caps what it can pay. So I'd say precedent transactions, then usually DCF, then trading comps, then LBO.

There's no method that always comes out highest, but there is a usual order. Precedent transactions usually give the highest value. Those are prices buyers paid for whole companies, so they include a control premium, and often part of the synergies the buyer expected. Trading comps come out lower because a share price is what a minority investor pays for a small stake with no control. The DCF is the one that can land anywhere. It depends on my own assumptions, mainly the growth rate, the margins, the discount rate and the terminal value. With optimistic projections it can be the highest of all, and with cautious ones it can be the lowest. If the projections come from management, I'd expect them to lean optimistic, which pushes the DCF up. An LBO analysis usually gives the lowest value, so people treat it as a floor. A private equity buyer needs to earn its target return, and that caps what it can pay. It also has no synergies to pay for, and it's limited by how much debt the company can carry. The order can flip. In a hot market, trading comps can sit above precedent deals that were struck in a weaker market a few years earlier. And for a fast-growing company, a DCF can beat everything, because the multiples are applied to today's small earnings. So I'd say precedent transactions, then usually DCF, then trading comps, then LBO. I'd treat that as a rule of thumb. If the methods came out in a different order, I'd want to explain each gap before trusting any of them.