For which type of businesses is the multiple method more commonly used?

The multiple method is commonly used for operating businesses like data centers due to its effectiveness in evaluating companies that generate consistent cash flows and have predictable revenue streams. This method involves using valuation multiples based on metrics such as earnings before interest, taxes, depreciation, and amortization (EBITDA) or revenue to assess the company's value relative to its peers.

In the case of data centers, they often have a straightforward operational model characterized by predictable operating expenses, stable revenue generation, and a clear understanding of market dynamics, making this method particularly suited for their valuation. The multiple method allows investors to quickly gauge comparable valuations and make informed decisions based on market trends and industry standards.

Other types of businesses, like retail, real estate developments, and construction companies, may experience more volatility and less predictability in their revenue streams, which can complicate the application of the multiple method. Retail businesses may face fluctuations based on consumer behavior, while real estate developments are influenced by market cycles, and construction companies are often affected by project timelines and changes in material costs. Thus, while the multiple method can be used across different industries, it is especially practical and reliable for operating businesses, such as data centers, where valuation can often be tied to consistent operational metrics.