Levels of Value: Why it Matters in a Business Valuation

A business may have more than one value, depending on the purpose of the business valuation and the characteristics of the ownership interest. Before an expert starts working on a business valuation, it’s important to discuss the appropriate level of value. Otherwise, confusion over levels of value may lead to miscommunication and misinformed business decisions. Moreover, when multiple experts calculate different levels of value, discrepancies and disputes abound. Here’s an overview of the three main levels of value. 1. Controlling interests Control value is one level. The ability to control a business’s decisions has impact on value, especially on the value of a closely held business. Potential buyers often may be willing to pay a premium for the ability to control business decisions. The key to arriving...