A seller wants the business appraised to establish a range of value before agreeing to the listed price. What standard of value should the appraiser be asked to find?
If the seller wants to know what the business is worth to him/her, then the appraiser must consider any synergistic contributions by the seller that a theoretical seller might not have and the “going concern” value of the future income reasonably expected, so the standard of value would be “investment” rather than “fair market value”. If the seller wants to know what a potential buyer might pay for the business on a cash basis and a buyer could be expected to operate the business in the same manner as the seller, then “fair market value” might be appropriate, EXCEPT in today’s financing market the lenders are almost always requiring the seller to participate in financing and are reluctant to loan money to people without industry experience, so if the appraiser must consider a sale price not based upon cash or cash equivalents at close and possible synergies from an industry experience buyer, then “investment” value is more correct.
Related Questions
- A seller wants the business appraised to establish a range of value before agreeing to the listed price. What standard of value should the appraiser be asked to find?
- What is the price range for a genuine swiss military watch from the original seller?
- What is the formula for evaluating PBR(Price to Book value Ratio)?
