Re: Assessing the viability of a business.


"Phil Thompson" <phil.thompson@xxxxxxxxxxx> wrote in message
news:2g7ff15kbe0qm5n505ndrmk8c726aqfkgq@xxxxxxxxxx
> On Mon, 8 Aug 2005 15:13:54 +0000 (UTC), "Tim" <me@xxxxxxx> wrote:
>
>> But any uncertainty
>>will produce an inherently *un-*reliable valuation. Don't you agree?
>
> yes. Where we disagree is that I would rather have an unreliable view
> of the future than a completely reliable view of the past. At least
> until the point where time reverses and the business starts to trade
> backwards along the historical path :-)
>
> I would of course take the past into consideration in forumlating my
> wildly unreliable prediction of the future.

Quite. You do your analysis and you form a view. Could be right, could be
wrong, or somewhere in between. If you followed Tim's approach you'd either
never bid at all on the grounds that the future is entirely opaque, or you'd
overpay, on the basis that the past will repeat itself indefinitely.

I am currently valuing four factories for a client in eastern Europe who's
thinking of buying them. The biggest imponderable is whether environmental
legislation will force them to spend large amounts of capex just staying in
business.


.

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