I just read a post from Mary Bennett on the Blue and Black versus White and Gold debate (http://mlbennettconsulting.com/1/post/2015/03/black-and-blue-or-white-and-gold.html). It is amazing how many people became involved with the debate over the color of a dress. For a few days, it seemed like most people had something to say about the dress. A week later, it is old news. For those who missed the debate, see http://www.wired.com/2015/02/science-one-agrees-color-dress/
Back to the dress and how it relates to business valuation. Mary made a very relevant point that struck home to the work that I do – valuing businesses. She posted,
“The phenomenon of the black and blue/white and gold dress is a simple reminder that we in fact do not experience the world in the same way.”
I am not sure I could come up with a better way to explain business valuation. The lens with which people view value can cause them to see it differently.
While we (business appraisers) used various applicable methodologies to arrive at a business value, the bottom line is that each person who considers the value of a company will perceive a different value as influenced by his or her experiences, risk tolerance, access to information about the business, intended purpose of the valuation, and specific investment objectives. Other factors that influence perceived value include motivation, opportunities for synergies, and even lifestyle choices. Each individual’s lens most definitively colors how he or she sees the value of a business.
So the bottom line: Is the dress black/blue or white/gold? The simple answer is: Yes.
In the world of valuation, businesses can simultaneously have different values as well.
If you have questions about this or other valuation matters, please contact me.
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