I have always admired former GE Chairman Jack Welch. He is a master communicator. He uses simple words, phrases and analogies.
When reviewing GE’s businesses, he chose whether to “Fix, Close, or Sell” them. What a beautiful, simple way to frame his decisions!
Fixing is improving performance; increasing cash flow to equity and / or reducing risk. The premise: hold onto the going concern business.
Closing is going out of business. The premise: liquidation.
Selling is divesting. The premise: sell as a going concern.
This is a great way to explain the three approaches to value:
The Income Approach = Fix (Hold)
The Asset Approach = Close
The Market Approach = Sell