What
is Investment Value Anyway?
Price
Driven by Purpose of the Appraisal, Professional Standards,
Appraiser Overhead
The International Glossary of Business Valuation Terms defines
Investment Value as “The value to a particular investor
based on individual investment requirements or expectations.”
The Guide to Business Valuation Glossary adds the phrase “...as
distinguished from the concept of market value, which is impersonal
and detached.”
The idea of investment value is that it is not based on a
hypothetical purchaser who represents a composite of all purchasers
for value, but instead on the value to a specified individual
with a specified set of investment criteria and especially
those with the potential for synergistic value. It arises
mostly where the appraiser is asked to estimate the value
of a business entity to a potential purchaser who is known
and identified at the outset. This might be the value, perhaps,
of shares in a target company to its acquirer, where the merger
of the acquirer and the target together will result in a combined
value greater than the sum of the individual values. |
