Appreciate the art, science of valuation

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Abstract: Lenders often have a stake in private company mergers and acquisitions, so it’s important that they know whether the target’s price is reasonable. Procuring a professional appraisal upfront can mean the difference between a long-term lending relationship and default. To help make informed lending decisions, lenders should know the standards of value used by appraisers, along with their valuation methodologies. A sidebar to this article points out the dangers of relying on generic valuation formulas.