Valuation – The Real Perspective
If you are Managing Assets Under Management (AUM) of Rs 50 cr, your Valuation is approx. Rs 2cr. to Rs 3cr.
But unfortunately this money isn’t available to you
It is all your Wealth but the Irony is you can’t use Your Own Wealth
1) What are we talking about????
2) We are talking about Valuation Wealth
3) What about Valuation?
4) Let’s say you are a successful Professional Earning an Income of Rs 60 lac per year
5) Let’s say you have a name and have defined your work process and your name has the power of a magnet to attract customers. But the Business is in your Own Name (Proprietorship), You have only One PAN Card which is your Own, Your Practice Income is your Personal Income
6) There are many Doctors, Lawyers, CAs, Financial Advisors, Architects, Consultants who could fit the bill of someone earning Rs 60 lacs per annum
7) A Rs 60 lac generating Business can easily have a Valuation of Rs 3 cr. This means it can be sold for Rs 3cr. to someone who would thereafter run the show. But this is NOT POSSIBLE because No Individual Human Being can be Sold or Bought. Therefore, this Wealth cannot be made available however competent one may be
8) Which means, if the Professional cannot exit his or her Profession/Personal Business for any reason such as
A) Early Retirement or
B) To move into another Business or
C) Sell a part of the Business and Monetize his or her efforts
9) Such competent Professionals find themselves in a Professional Trap or maybe you can call it the “I, Me, Myself” Trap
10) Because he or she has Nobody other than HIMSELF OR HERSELF as the Chief Value Creator (CVC)
11) And he or she cannot sell himself or herself either in full or in part
12) This is the Invisible Trap that very successful people fall into
13) Because they choose to remain the Ultimate Expert
14) This Trap is the Price one pays for Hubris, Pride & Ego of wanting to be the Best and having Solo Control
15) Unfortunately we don’t forget that we are perishable just like fruits and vegetables
16) We grow old, grow irrelevant and eventually grow out of this planet
17) This is the reason why one needs to Corporatise
18) This is the reason why one has to transfer one’s Personal Equity into a Corporate Entity
(remember Equity into Entity)
19) Valuation can in fact be created just by changing the form of the Business Entity
20) This is the real meaning and significance of Business Building or Brand Building
21) This is the significance of creating a Legacy Business, A Timeless Asset
I rest my case
