Valuation – A Science OR an Art
VALUATION – A SCIENCE OR AN ART: A lot of creditable work has been done by academicians, experts and regulatory bodies on formulating and standardizing the Methodologies and Approaches to any Valuation exercise. The Valuation Regulatory Bodies world over have prescribed Valuation Standards to facilitate just and proper valuation of any asset or any business. However, interestingly, in valuation circles it is widely believed that Valuation as a subject, is neither a Science nor an Art.
It is an undeniable fact that the basically any Valuation exercise involves a lot of number crunching. However, it is also true that mere number crunching may not be adequate to include all the X factors of any business or asset which drives the value as these are hard to capture on paper. A proper mapping of these factors and evaluation of their precise impact on the Valuation of an asset or a business practically depends on the wisdom and judgement of the Valuer. This obviously leads to elements of subjectivity in the Valuation process which influences the valuation appraisal and outcome. Balancing the impact of these subjective elements in any Valuation appraisal or exercise is more of an art than a science.
It is, in this context, the users of Valuation report widely believe that an accurate and proper Valuation is both a Science and an Art.
Any thoughts on this perspective?
Advisor- Exploration, Mining & Metals | Critical & Strategic Minerals (CSM) ; EV Battery Metals;Rare Earth Elements (REE) | Mining Value Chain |
9 个月LSI Group Valuation is the Art of Scientifically applying knowledge/Experience by using realistic and unsalted data without introducing any assumptions/ bias.The evaluater should behave like a machine..no subjectivity..
Chief Manager at Mid Corporate Branch at Punjab National Bank
9 个月Valid point! and an interesting article... good to see you after a long time
Partner at Saraf and Partners, ALB Asia 40 under 40, IBLJ A-List, IFLR1000
9 个月Nice article, valuation depends on various external and internal factors and not just by numbers.
Vice-President - LSI Group || Ex-PwC || Ex-SRK Consulting || Ex-Rio Tinto
9 个月Valuation is like mixing ingredients for a perfect dish—combining hard facts with a sprinkle of vision to create a recipe for value that's irresistible. This is very interesting at the end.
Financial Controller @ Haldia Petrochemicals Ltd | Chartered Accountant
9 个月Interesting view Mr Bhattacharya.