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CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Two valuers separately value the same unlisted company. One values it for a sale to a strategic buyer expecting synergies, the other for a minority shareholder's exit. Their figures differ materially. What best explains this?

Different purposes and premises of value can legitimately produce different results. A strategic sale may include synergies while a minority exit may reflect discounts, so the difference does not by itself show an error or a single statutory value.

  1. AOne of the valuers has certainly made an arithmetic error
  2. BValue depends on the purpose and premise of the valuation, so different purposes can legitimately give different valuesCorrect
  3. CValuation of an unlisted company must give a single fixed statutory figure
  4. DSynergies are never considered in any valuation

Explanation

Standard of value and purpose affect the result: a strategic buyer may pay for synergies, while a minority exit may involve discounts. Differences therefore need not indicate error. No single statutory figure exists for all purposes, and synergies can be relevant to some.

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