He asked us for a valuation. That was not what he needed.

A business owner came to us recently with a request for a valuation – he confronted a decision resting on a very tight deadline: Other valuers had already looked at the job and said no. Time, he was told, was the problem.

When we ask a professional for help, we all assume that we know what we are asking for and we also assume that we are speaking the language the professional understands. But imagine for a second you are in the plumbing aisle trying to explain some ambiguous use for an equally ambiguous pipe fitting to a totally ambivalent young employee. Now you know what I mean!

Business owners are no different. When something urgent happens, you pick up the telephone, you say the word you think is correct, and you assume that whoever answers understands exactly what you mean. More often than you would expect, they do not, and it is nobody’s fault.

I do not believe that limited time was the real problem my business owner confronted.  I believe the factual problem was complexity, not calendar; and it is considerably easier to blame a deadline than to admit you cannot see a way through incomplete information.

There is a sizeable difference between levels of valuation work we undertake. Under the International Valuation Standards, a valuation is comprehensive: full procedures, complete information, and a high degree of confidence in the figure produced. But there are narrower focussed and less complex valuation assignments. For example, a calculation of value engagement is defined for just such narrower assignments – but how would the average person in the street know that. My position is no they would not – and why expect them to. 

A calculation engagement can still be “fit-for-purpose.” It uses less extensive procedures, it works with the information available at the time, and it produces a figure fenced by assumptions that are stated plainly. Both ends of the valuation spectrum have their place. The skill lies in knowing which one a client needs, before you assume one-size-fits-all.

Last week that skill was the difference between a business owner going without an answer and a business owner getting one — on time, and defensible.

This is not a criticism of valuers who declined a job they could not see how to complete responsibly. It is the exact problem this article is about. People do not know what they do not know. They assume a valuation is one fixed thing. It is not.

He asked for a valuation. What he actually needed was a calculation of value.

Rather than take his agitation at face value, we asked more questions — why he needed the opinion, and who he needed it for.

The available data could not support a full valuation to the standard we require. It could support a calculation of value: a figure built on sound methodology, within assumptions that were logical and defensible to the target reader.

Logical and defensible. Those are the words I return to whenever the data is imperfect, which, in my experience, is more often than not. If every assumption behind a figure can be explained and defended with logic and purpose, the figure is sound, even where the underlying information is incomplete.

We were prepared to go the extra mile, and by taking the time to understand what he wanted to achieve, we worked within his timeframe and delivered an outcome very close to what he had originally wanted: a report that was fit for purpose. Not a guess dressed up as certainty. Not a refusal dressed up as caution. He was satisfied enough with the outcome to offer Negotia a testimonial.

What would have happened had we simply said no, as others had done? He would have gone without an answer at the exact moment he needed one, and we would have missed the chance to show the one thing that separates a professional communicator from an average one: the willingness to look behind the problem, to secure an understanding before giving an answer.

If you are a business owner under pressure searching for help, take note. Whoever you speak to should be asking you questions, not simply taking your request at face value and running with it. The word you use to describe what you need may not be the correct technical description of what you require, and that is entirely reasonable. Knowing the difference is our job. It is not yours.

For accountants and solicitors referring to a client who is under time, resource or money pressure, the same principle applies. A full valuation is not always necessary, appropriate, or even achievable within the resources available. A properly scoped calculation of value, undertaken by a valuer prepared to ask the right questions first, can often deliver a defensible answer compliant with accounting, ethical and valuation standards well within a deadline others have called impossible.

If you are asking for a valuation and are not entirely certain that is exactly what you need, or if you are working to a deadline someone else has told you cannot be met, call me directly on 1300 551 757. I will ask the questions first.

Kevin Lovewell is a Registered Business Valuer and Principal at Negotia Group. This article is general commentary and does not constitute valuation, financial, legal, or tax advice for any individual circumstance.