Most business appraisers can recite the hornbook definition of “fair market value” by heart (the price at which property would change hands between a willing buyer and seller, neither under a compulsion and both with reasonable knowledge of the relevant facts).  But—“what is the definition of a willing buyer?” asks Jay Fishman in BVR's telephone conference last week on “Standards of Value” (with Shannon Pratt, William Morrison, and moderator Ron Seigneur).

“Is it a group of buyers?  Is it a pool of buyers?  Is it one buyer? We used to think that fair market value does not entail synergies,” Fishman adds, and generally, this remains true regarding synergies unavailable to most buyers.  But: “There’s a case called BTR Dunlop where the Tax Court actually indicated that you should look at the pool of willing buyers.”  In that case, there were six of them, each bringing a synergy that became relevant in determining fair market value.

For a free copy of the 1999 BTR Dunlop from the BVLaw™ database, case, click here; for a copy of Standards of Value: Theory and Applications, from co-authors Fishman, Morrison, and Pratt—including a 15% price discount, originally offered at the telephone conference—click here.