Valuation Glossary

Majority interest means having more than half of the ownership or control in a company. When someone or a group has majority interest, they can make important decisions and have a strong influence on the company. They can shape its direction, elect the majority of the board of directors, and control key aspects of the business. However, they must still act in the best interests of the company and its shareholders.

Majority control means having enough ownership or voting power in a company to make important decisions and have a significant influence. When someone or a group holds a majority of shares or voting rights, they can determine the company's direction, choose key executives, and approve major transactions. It gives them the power to shape the company according to their interests. However, there are still rules and protections in place to ensure fairness and protect the rights of minority shareholders.

Liquidity refers to how easy it is to buy or sell an asset without affecting its price. High liquidity means it's easy to trade the asset, while low liquidity means it's harder to find buyers or sellers. Liquidity is important for investors because it affects how quickly they can convert an asset into cash. Assets like stocks and government bonds are highly liquid, while certain real estate or private company shares may have low liquidity. Monitoring liquidity helps ensure smooth markets and financial stability.

Liquidation value is the estimated worth of an asset or business if it were to be sold quickly. It takes into account the urgency of the sale and the need to convert assets into cash swiftly. In a liquidation, assets may be sold at a lower value than their market or book values. Liquidation value considers factors like market conditions and the costs involved in the selling process. It is used in situations such as bankruptcy or when assessing the value of distressed businesses. It provides an estimate of the amount that could be recovered from the quick sale of assets.

Limited appraisal refers to a condensed or restricted assessment of an asset's value. It involves a focused analysis that may not provide as much detail as a full appraisal. The appraiser concentrates on specific aspects relevant to the appraisal purpose, which may result in limitations due to factors like data availability or time constraints. While it may not offer a comprehensive understanding, a limited appraisal can still provide useful insights for specific purposes. It's important to be aware of its scope and limitations and ensure they align with the appraisal requirements.