Determine the appropriate standard of value for your valuation analysis: the type of buyer or seller, purpose, and what is motivating them.
- Fair market value
- Willing buyer, willing seller, both informed, not forced to transact
- Same management competence and access to capital
- Financial buyer, not a strategic buyer (no synergistic benefits assumed – no revenue enhancements and/or cost reductions)
- Spelled out in detail in Revenue Ruling 59-60 (guiding light)
Appropriate for:
- Estate, gift & income tax
- Often in buy-sell agreements
- Divorce (but depends on state statute)
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