“Are the valuations for a business a science or an art?”
Updated: Jan 23
Business valuations are both part art and part science.
Beware the M&A advisor that claims otherwise!
It is incredibly satisfying to google your neighbour’s property on Rightmove and just assume that your own house has also appreciated in value. It sounds easy but looking at comparable prices can be very much part of any scientific valuation.
Unfortunately, for shareholders of small to medium TIC businesses, no such easy comparator exists to determine the value of your business. Just like the property sector, the TIC Mergers & Acquisition’s market has never been hotter! But it is nearly impossible to find genuinely comparable companies to support the valuations of another.
The difficulty is twofold. Partly the public information of actual prices paid, and valuation approaches are largely reserved for large scale transactions performed by publicly owned TIC corporates who have a disclosure obligation to their shareholders. Frequently there are no verified small to medium sized business examples.