ARTICLE · 26 SEPTEMBER 2013

Defining Value: What Is Fair Market Value?

Duff & Phelps

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In the absence of an open market transaction, where an informed buyer and an informed seller negotiate a transaction price, business value must be determined in a notional market context.

CanadaTax

Neil De Gray

In a business valuation context, the term value can have many different meanings. Terms such as fair market value, fair value and price are often used synonymously to describe "value"; however, each of these terms has a different meaning and interpretation. The purpose of this article is to define fair market value.

FAIR MARKET VALUE

In the absence of an open market transaction, where an informed buyer and an informed seller negotiate a transaction price, business value must be determined in a notional market context. Notional market valuations are required for a variety of reasons including family law proceedings, commercial litigation, shareholder oppression proceedings and income tax and estate planning.

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