A valuation is an argument, not a formula
Every credible valuation rests on three methodology families. The market approach triangulates from comparable companies and precedent transactions. The income approach models the future cash the business will generate and discounts it to today. The asset approach asks what the business is worth in its parts — relevant for holding structures and asset-heavy operations.
None is universally correct. Purpose determines method: a sale process leans on market and income evidence, financial reporting has its own standards, and disputes demand methodological triangulation that survives hostile review.
The three numbers that anchor everything
Whatever the model, diligence teams and regulators consistently return to three anchors: revenue quality, sustainable earnings, and the asset base behind them. Revenue that is concentrated, episodic or dependent on a single relationship discounts quickly. Earnings that cannot be separated from the founder’s personal effort discount further still.
Preparing for a transaction or listing is, in large part, the work of making these three anchors as clean and defensible as they can be — before an external party prices their imperfections.
Process discipline: collect, select, validate
A defensible valuation follows a visible process. Data is collected and verified first — financials, operations, market evidence. Models are then selected to match purpose, not to produce a desired number. Finally, outputs are validated against the anchor metrics and stress-tested for sensitivity: what happens to the conclusion if growth is one point lower, or working capital one turn worse.
The documentation of that process matters as much as the number itself. In negotiation, in boardrooms and before authorities, the measured party is the one whose arithmetic is transparent.
When to commission one
The efficient moment is early — at deal conception, at restructuring planning, at the start of a listing diagnostic — because the valuation’s findings shape decisions while they are still cheap to change. A valuation commissioned at signing is an ornament; commissioned at conception, it is an instrument.