There’s Value in the Process, Not Just the Conclusion

“It’s the business valuation process that’s a large part of the benefit, not just the actual conclusion of value. I learned a lot about my own business by going through the process with you.”

—Steve, 25-year Business Owner

 

 

During our initial valuation work together 4 years ago, I recall Steve’s good-natured teasing about how many questions we asked. But it is a lot like working on a puzzle, and we need all the right pieces to get the complete picture.

Upon returning for an update to his business valuation, when Steve shared that comment with me it reinforced why our approach to business valuation provides value to the business owner, beyond the actual single conclusion of value.

Of course, we ask questions that are quantifiable in nature—questions considering revenue growth, why are specific expenses changing, when will you need to purchase equipment?

But if you only focus on the quantitative parts of the valuation—the financial data—it is like only looking for the flat edged pieces of the puzzle and building just the frame and thinking it’s complete. It becomes a far more telling puzzle when you work through the harder pieces in the center—in fact, you can see the whole picture.

Same with businesses. For Steve, the insight from the process was especially useful as he recognized how qualitative factors also impacted value. Factors such as:

  • the company’s diverse geographic locations
  • the benefits of existing vertical integration
  • the company's hard-earned national reputation as being one of the best
  • the company's readiness to be aligned for market demand

The valuation process, when done thoroughly and correctly, can help you and your client complete their unique puzzle. We have the tools that can help you have this conversation. Let us know if we can be of help.

Cathy is the President of Capital Valuation Group, Inc., headquartered in Madison, WI. Capital Valuation Group has been helping business owners across the country understand, increase and unlock the value of their businesses for over 40 years through keynote speaking, valuation analysis, determining damages and providing expert witness testimony. Cathy welcomes conference and event speaking inquiries and can be reached at cdurham@capvalgroup.com.