What Is Meant by “Premise of Value?”

Posted byJVFSPosted inBusiness Valuations, Controlling Interest, Going Concern, Liquidation, Marketability, Minority Interest, Premise of Value

The “Premise of Value” can refer to an assumption as to the status of the business under which a transaction is, or would be expected to occur. That is to ask, will the business be a going concern, will it be in an orderly liquidation, will it be as a forced liquidation, or will it

be the value as an assemblage of the assets being in a nonproductive state? Other considerations pertaining to the “Premise of Value” may include, but are not limited to:

  1. Is the interest being valued a controlling interest?
  2. Is the valued interest a minority interest?
  3. What is the status of the interest’s marketability?

Any one of, or a combination of the above considerations will have a significant impact upon the work performed by the valuation analyst. Experienced Certified Valuation Analysts know the importance of identifying the correct premises of value.

We can help your clients when credible valuation reports are required, please call one of our credentialed professionals at (615) 822-8342 or contact us via email.