Depending on the use of the valuation report, the body governing or regulating the valuation requirement will usually specify what effective date must be reflected in the appraisal.
Appraisers determine value based on what is known or knowable as of a specific point in time. While an appraiser is expected to look to the future, value conclusions are driven by the information available as of a specific date. Events such as the collapse of Lehman Brothers or September 11 could not be reasonably foreseen but had significant negative valuation impacts. Most assets were worth significantly more the day before these events occurred.
Many times the purpose of an engagement will drive the valuation date. Included below are some examples of projects where the valuation must be performed as of a specific date:
Mis-specifying the valuation date can lead to gross errors in value conclusions or additional costs in obtaining another appraisal! Hiring appraisers that recognize these types of issues will save professionals both time and money, and will result in better work products.
AccuVal provides a broad range of valuation, advisory and asset management solutions that contribute to growth or help ensure survival. We appraise the business enterprise and shareholder equity; bonds; intangibles and intellectual property; machinery and equipment; inventory; real estate and accounts receivables in over 100 industries worldwide. Learn more at www.accuval.net.