Significance of Value

It's always hard to value things. In some cases, you don't have enough information. In other cases, you don't want to know the truth.

—Donald Brownstein (1972–), American investor

SINCE THE BEGINNING OF TIME, some form of valuation has been involved in estimating the worth or price of each item in every exchange between trading parties. Whether through barter, cash, or some other medium, assets have been exchanged constantly in personal, business, and taxation transactions on some agreed-on basis. Before money and banks, payments often consisted of sheep, goats, or bushels of grain; in each case, an implicit value was involved. As a result, based on the earliest known records, from around 5000 B.C. at Jericho in Israel, some consider valuation to be the world's fifth oldest profession, after hunters, farmers, merchants, and priests.


When considering a substantial business deal, whether a major expansion, significant acquisition, plant closure, or considerable divestiture, management will eventually reach a tipping point. A go/no-go decision has to be made, based on a bottom line calculated from inadequate information. The key questions are: How much value will be created, and for whom? The answers can be elusive; the process is rather like trying to distinguish a black sock from a blue one when dressing in the dark. Often, many of the assets involved can't be seen and aren't recorded anywhere, but are still real.

Many readers, ...

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