4. What Is Meant by "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 may have a significant impact upon the work performed by the Valuation Analyst.

Experienced and credentialed Valuation Analysts know the importance of identifying the correct premises of value.