Appraisal hurdles unique to promissory notes

BVWireIssue #97-2
October 13, 2010

At the recent Arizona Society of CPAs Business Valuation Conference Suzanne Daggert (Kotzin Valuation Partners) outlined several challenges to valuing promissory notes:

  • In most cases the borrow and lender are related parties
  • Most notes are issued without adequate financial disclosure or review of borrower creditworthiness
  • Most of the private notes have terms which are not available in the commercial retail market

“These factors make it difficult for appraisers to find appropriate proxies,” added Daggert.  Look for an article on the subject by Daggert in a future issue of Business Valuation Update™

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