28 Business valuation
‘Managers and investors alike must understand that accounting numbers are the beginning, not the end, of business valuation.’
Warren Buffet, Chairman and CEO, Berkshire Hathaway
In a nutshell
For a business, the ultimate measure of success is its valuation, which is essentially the price a willing buyer is prepared to pay to own part or all of the business.
Public companies have a real-time indication of their valuation though the stock market, which provides a platform for buyers and sellers to interact. Private businesses, however, have less access to buyers and sellers and therefore valuations are more challenging.
There are a number of valuation methodologies, which provide a range of prices and are used by both ...
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