Valuing Your Company? Not always what it seems!

The same company can have different values. Strange but true. It depends on what the valuation is for. Here are three examples: fair market value; fair value, and ;strategic value.

Fair Market Value: The standard of value required for tax reporting purposes. This standard tends to result in the lowest of the three methods. It assumes a hypothetical buyer and seller. Discounts for lack of marketability, and minority interests are taken.

Fair value: The standard typically used in shareholder disputes and marital dissolutions. It is the intrinsic value being exchanged. It does not assume a hypothetical buyer and discounts are not taken.

Strategic value: This assumes the buyer is an existing company which will realized strategic benefits by acquiring the target. Customer base, work force, technology etc. It tends to result in the highest of the three. It is appropriate in the context of an acquisition.

Interested in more information, please contact GW-Legacy serving Sioux Falls and the surrounding great plains region.

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