It is commonly said that the valuation of companies is more of an art than a science. The essence of this statement is that arriving at a valuation is a matter of judgment, balancing the consideration of various factors, rather than the mechanical application of a mathematical formula. This is especially true when trying to value an unquoted (privately-owned) company. However, this does not mean that valuation is a purely subjective exercise, where different figures arrived at by different routes may be regarded as equally valid.

From the valuer’s perspective, some approaches may clearly be a better guide to value than others in specific situations. The skill of valuation lies in assessing the relative appropriateness of differing valuation benchmarks to a particular situation.