Valuation: If you know Van Gogh, you know it all.

I recently had an aha-effect when I discovered that I can understand how to value businesses if I can understand the science behind valuing art. Throughout my time in Michigan, I tried to figure the logic behind valuing companies and didn’t because there’s none. Everyone in bschool tried to talk to me into numbers and I knew that that logic could be fudged. If you think about it – Van Gogh, Picasso, Paul Guaguin etc. are all ugly but they are original. When the market tried to put a value to it, they couldn’t because there was nothing they could compare it with. Similarly, if the market can bucket a business as say financial services/ BPO/ IT or whatever – they will compare and value it like other companies they know in that space – but if the business is original enough then the drama begins. And then finally and quite simply the secret behind valuation is this: the value of *anything* is what someone is willing pay for it.