- One of the main steps in business valuation work is adjustments of financial statements and “correcting” potential errors in the audited financial statements.
TRUE FALSE
The essence of adjustments of financial statements by business valuators is not to correct errors in the financial statements. The goal is to ensure consistency of the statements to fair value and the valuation at hand by taking out incomes and costs items not directly related to the business, identifying missing inputs such as off balance sheet items, updating values of assets from book value to fair market value, adjusting costs to reflect fair market value, etc. The answer is FALSE.
- If a business in South Africa is valued for two potential investors; one in the UK and one in the USA, the fair market values should be different because of the different currency regimes.
TRUE FALSE
The fair market value of a business is not linked to the origin of a potential investors and M&A parties. Therefore, irrespective of where the potential investors are coming from, the conclusion of value reach by the valuator through the analytical work, should be the same for any potential investor. The answer is FALSE.
