1. There is one correct number, forever

A valuation relates to a particular date, purpose and set of rights. Changes in operating performance, financing or market conditions can change the conclusion. A detailed model does not make the estimate permanent: the evidence and assumptions behind it remain essential to understanding what the number means.

For example, a report prepared before a major contract was lost should not automatically be treated as an assessment of the business after that event.

2. A loss-making business has no value

A current loss does not explain the entire business. A company may be investing ahead of revenue, holding valuable assets or facing a temporary setback. Equally, a loss should not be dismissed simply because management expects growth. Funding needs, the route to sustainable cash generation and the risk of failing to achieve it all matter.

3. One formula works for every company

An asset-holding company, a mature manufacturer and a young service business have different economics. The quality of available forecasts and comparable evidence also varies. Selecting an approach requires an understanding of the subject and purpose of the valuation; applying a familiar multiple without that context can conceal important differences.

4. The agreed price is the same as value

Price is the amount agreed in a particular transaction. It may reflect negotiation, payment terms, strategic benefits or the rights attached to the investment. A valuation is an opinion developed on a stated basis. A recent transaction can provide useful evidence, but its terms and circumstances should be understood before using it as a benchmark.

5. Valuation only matters when selling a business

Valuation can also support funding, employee ownership arrangements, restructuring and financial reporting. Each engagement begins with the decision or requirement it is intended to address. A report prepared for a sale is therefore not automatically suitable for an employee securities exercise or a later capital raise.

The practical starting point is to agree what is being valued, why the opinion is needed, the relevant date and who will rely on it.