Pj568

Hot Debate Surrounding Bank Solvency

Bull, try using historical cost as an asset value when attempting to get a business loan and see what the bank says. You'd be lucky if they didn't turn you over to the feds for attempted bank fraud.

Pick Your Poison: Fair Market Value, Orderly Liquidation Value or Forced Liquidation Value

Oh, the other key assumption is of best use. The only parties than should use a price other than the current price are those where the value of the discounted cash flow clearly exceeds the current price and they have no intention of selling because it would be plain stupid to do so. Unfortunately there a so many ficticious professional analyses being generated, just look at the lack of write downs in the goodwill area across the board as proof. So the only realistic value for the great majority of companies is really the current transaction prices whether they are deemed distressed or not.

Pick Your Poison: Fair Market Value, Orderly Liquidation Value or Forced Liquidation Value

In my opinion the real value of an appraisal is in the presentation of comparative sales. Everything else is some form of justification or wishful thinking. Of course the first thing to be examined are the assumptions under which they're issued. We assume a liquid market....knowledgeabl... buyers and sellers.....no distress...etc. So our conclusion can only be that they're are a rationalization of current contract/transaction prices. Anything else is pure conjecture and you only have to look to the party that hired them to assess the bias.