EVALUATION VS. VALUATION
Evaluation answers two key questions:
- Is this company a good strategic fit?
- Does this company match my one reason to buy?
The primary method for conducting evaluations is rating the company against the acquisition criteria that your A-Team drew up (see Chapter 3). Recall from Chapter 5 that each criterion carries a specific metric and a weighted value for scoring. Needless to say, your assessment of a company includes many components that are not necessarily financial, even though you have given them a metric in order to create your scoring system for prospects. These are the components that evaluation addresses.
Valuation refers to the specifically financial component of the equation: It defines the economic value ...
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