Recommended reading: Rip-off!

Whenever I read a book, I try to find some lessons that I could use in business valuation practice. I recently read a book titled "Rip-off!: The Scandalous Inside Story of the Management Consulting Money Machine" by Craig David (http://www.amazon.co.uk/Rip-off-Scandalous-Management-Consulting-Machine/dp/1872188060/ref=sr_1_3?ie=UTF8&s=books&qid=1246308576&sr=8-3).

It made me think of mostly one thing: if only business appraisers could charge such huge fees for our work as management consultants do :-) On the other hand I will be much more careful when valuing companies that engage management consultants - is there a clear purpose as to why they hired consultants? If not, it can make you seriously doubt the capabilities of the management and the future of the company. At the very least you have to re-check whether their expansion plans are not perhaps value-destroying as opposed to value-creating. I'm not saying that hiring management consultants is a bad thing. Not always. But apparently often enough. So when I hear of such a practice in my future business valuation engagements, the little yellow warning light will definitely go off.

Apart from that: very funny and very interesting reading. I highly recommend it!

Do-it-yourself business valuations

I recently saw a website offering companies to teach their employees "all there is to know" about business valuation in 71 minutes. After listening to the course they can go and do business valuations by themselves.

At first I was amused. Anyone who does business valuation for a living knows it's all about experience.

But then I got scared. What if people actually listen to this advice, take this "course" and start making business decisions based on such valuations? Would you let someone who took a 71-minute course on brain surgery perform one on you? No? But you wouldn't mind making a decision to buy or sell a company based on a valuation derived to by such a "professional"? Sure, let's save a few thousand in order to potentially waste millions.

I know, it's a free world, people can do as they please. But at least it can't be said I didn't warn about potential adverse effects of decision making based on such inputs and analyses. My conscience is clear.