It may seem economical and time-effective to reuse an old business appraisal for a new purpose. But recycling an appraisal without a valuator’s approval could prove costly over the long run. This article points out that there can be several definitions of value; a company’s value can change over time; and valuators face different considerations depending on why a business is being appraised.
Private company appraisals are often derived from public stock data, because it’s more relevant and plentiful. But private and public companies can markedly differ in terms of risk, expected return and liquidity. Appraisals that fail to account for these differences could be making “apples-to-oranges” comparisons. This article lists some of these key differences between private and public companies.