Premise of Value
Definition
Premise of value is the underlying assumptions or conditions used to determine the value of an asset or business. It can vary depending on the context of the valuation and may include assumptions about the future of the business, the type of transaction, or the market conditions. The premise of value is important to define at the outset of a valuation engagement to ensure that all parties involved have a clear understanding of the underlying assumptions and conditions used to determine the value.
Further Explanation
Premise of value refers to the underlying assumptions or conditions that are used to determine the value of an asset or business. It is a key concept in valuation and is often used to define the purpose and scope of a valuation engagement.
The premise of value can vary depending on the specific circumstances and context of the valuation. For example, a business valuation might be conducted with a going concern premise of value, which assumes that the business will continue to operate as a viable enterprise in the future. Alternatively, a valuation might be conducted with a liquidation premise of value, which assumes that the assets of the business will be sold off in an orderly liquidation.
Other common premises of value include fair market value, which assumes that the transaction is between a willing buyer and a willing seller, both of whom are knowledgeable about the asset and are acting in their own best interests; and intrinsic value, which assumes that the value of the asset is based on its underlying fundamentals, such as its earnings potential or cash flow.
Overall, the premise of value is an important consideration in valuation, as it helps to define the purpose and scope of the valuation and can have a significant impact on the resulting value estimate. It is important to clearly define the premise of value at the outset of the valuation engagement to ensure that all parties involved have a clear understanding of the underlying assumptions and conditions used to determine the value of the asset or business.
Why Appoint Valtech as Valuation Adviser?
Valtech’s team has provided valuation advice to over 200 listed companies in Hong Kong, China, Singapore, Taiwan, Australia, the United Kingdom, the United States and Germany.
Valtech Valuation is a professional valuation firm accredited with ISO-9001 in valuation advisory services. The financial market and valuation requirements are highly dynamic. We are determined to develop and maintain a quality management system to foster an environment which is sustainable and evolving continuously. Our founders stress on development of a system and an environment that our consultants are provided with necessary support and opportunities to thrive.
We are a team of professionals from multiple disciplines including audit, financial modelling, tax, internal control and surveying. Our management adheres professional excellence. Abundant resources are reserved to develop standardized policies and procedures for quality control. We have solid track record in valuation advisory for listed companies, private equity, fund managers and financial institutions. We work closely with big four and other international accounting firms, corporate financial advisors, fund managers and legal advisors.
Valtech Advantages:
Advanced Valuation Techniques: Valtech Valuation can develop and implement advanced valuation techniques that are specifically tailored to the needs of clients. These techniques can go beyond traditional valuation methods and incorporate factors such as market trends, industry benchmarks, and risk analysis to provide more accurate and insightful valuations.
Customized Valuation Models: Valtech Valuation can create customized valuation models that align with the unique investment strategies and asset classes. By understanding the specific requirements and objectives of these entities, Valtech Valuation can develop models that capture the nuances of their portfolios, resulting in more precise and relevant valuations.
Data-driven Insights: Valtech Valuation can leverage its access to comprehensive data sources and analytics tools to provide data-driven insights. By analyzing market data, economic indicators, and performance metrics, Valtech Valuation can offer valuable insights into the valuation of assets, identify emerging trends, and help inform investment decision-making.
Adherence to Compliance and Reporting Standards: Valtech Valuation can ensure that valuation practices adhere to regulatory compliance and reporting standards. By staying updated on relevant regulations, such as accounting standards and industry guidelines, Valtech Valuation can help clients meet their reporting obligations accurately and in a timely manner.