In a valuation, nothing can be viewed in isolation, you always need to consider the overall picture. However, the big picture is also made up of many sources, inputs, logical decisions and methods, without which the overall picture would no longer make sense. Because the value of a company is not to be viewed in isolation, it is also true that the valuation should be adapted to the scope and audience, meaning that the value of the company may change based on the situation or transaction. It may seem complicated, but valuers have specific terminology and processes to ensure that all of these factors are considered.
All of these inputs that flow into the valuation process require the use of science (techniques) and judgement (experience) to some level, but the correct use of some inputs may require more judgement than others.
The market and company analysis that is necessary in the first phase of the valuation will help you draft a financial plan for the company, and includes the following:
Building a good financial plan requires comprehensive industry knowledge, but how the other factors are applied to a valuation demand a high level of judgement, since they are highly dependent on each other.
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