Microsoft Word peachtree case study
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| 2.6 Premiums and Discounts Businesses are not bought and sold after applying premiums and discounts. Instead, discounts and premiums are the result of using less than perfect data to measure value. In addition, it is critical to identify the valuation basis for each indicated value (based on the specific valuation method) before applying valuation discounts and premiums. This is necessary as different business valuation methods produce a value with attributes different from the value required for the particular valuation. In cases where the value calculated differs from the subject interest being considered, valuation adjustments in the form of premiums and/or discounts must be applied to restate the indicated value to the desired basis. Therefore, the final value determined in the appraisal of a closely‐held business maybe more or less than the calculated value using the various approaches and methods that would be appropriate for the Subject Company and interest being valued. The type and magnitude of the discounts) or premiums) will vary based on where the analytical starting point was. The starting points are directly dependent on which methods (under the chosen approach) of valuation were used during the valuation assignment, as well as other relevant factors, including the sources used to develop pricing multiples or a discount rate and normalization adjustments. The following sections discuss the general attributes of valuation calculations and the nature of the premiums and discounts (referred to as valuation adjustments) that maybe required. Download 0.84 Mb. Share with your friends:
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