Understanding The Basis Of Value Matters More Than Ever

Different forms of value have different meanings, and these differences are crucial for valuation practitioners, legal professionals in commercial disputes, business leaders in financial decision-making and for financial and tax reporting. Using the incorrect basis of value can be detrimental and may lead to the loss of a critical case for a client, to regulatory sanctions or to reputational damage.

This article outlines the importance of the basis of value, the consequences of choosing the incorrect basis of value and an example of how FTI Consulting provides valuation opinions on the correct basis.

Why Basis of Value Matters

The basis of value sets the stage for everything that follows in a valuation, including methods, assumptions, inputs and conclusions. It informs the fundamental assumptions underpinning the valuation, and links directly to the intended use. Under International Valuation Standards¹ ('IVS') 101 and 102 and Accounting Professional and