The challenges to producing a defensible data valuation

There are challenges to producing a defensible data valuation.

At Data Valuation Partners (DVP) we have developed, tested and implemented over twenty models to ensure there is rigor in providing a defensible data asset valuation. By using multiple models DVP provides mathematical precision in each and every financial valuation.

Data valuations are influenced by numerous factors, market conditions, industry trends, customer behaviour and the regulatory environment. DVP view the valuation process as dynamic and iterative.

DVP counsel clients to conduct a valuation rebalancing exercise prior to a strategic event such as an investment or M&A transaction. This is important because over time the data set flexes due to the addition of new data and the degradation of other data. The rules around data as an intangible asset dictate that data should be measured and calculated at a point in time.

One of the key determinants of data value is data quality which is also a major challenge for many organizations. These challenges manifest themselves as incomplete, inconsistent, inaccurate or irrelevant data. All these significantly reduce the value of the data.

Data security and privacy are critical concerns when conducting a valuation, with breaches, data leaks, data misuse or theft all being taken into account. DVP review data security and compliance measures are all audited during a valuation exercise.

The valuation of data is not an easy exercise to execute and involves multiple challenges. To be effective it requires clear strategic vision to overcome the technical, operational, organisational, legal, ethical or cultural challenges and complexities. DVP’s experience has shown that businesses benefit most when they adopt a willingness to learn and adapt from the results of the valuation exercise.