Page 13 - Bankruptcy and Reorganization Services

Chapter 2

Scope of This Practice Aid

As one might expect, business valuations performed in a bankruptcy context expose practitioners to
many unique issues not found in other valuation engagements. This practice aid identifies and discusses
a number of these unique issues and provides examples to help illustrate the topics covered. Readers
should be aware that it is not intended to be authoritative, nor is it intended to represent a comprehensive
treatise on bankruptcy or business valuation. Furthermore, it assumes readers have a working knowledge
of bankruptcy and business valuation principles and practices. Readers seeking additional information
on these topics should consult the nonauthoritative and authoritative guidance and educational programs
listed throughout this practice aid.

This practice aid also discusses professional standards; nonauthoritative and authoritative business valu-
ation guidance; valuation purposes, standards, premises, approaches, and methods commonly used in
bankruptcy valuation engagements; bankruptcy situations requiring valuations; valuation issues unique
to distressed and bankrupt companies; and illustrative examples of bankruptcy valuation issues.

Readers are encouraged to keep in mind that, as with all forms of valuation and appraisal, business valu-
ation is not an exact science. The market determines value. Valuation analysts estimate value by deter-
mining the most probable price within a range of reasonably acceptable values. Readers are also remind-
ed that in bankruptcy, differences are frequently resolved through negotiation between the parties.

This practice aid assumes a working knowledge of valuation techniques and bankruptcy practice. Ac-
cordingly, the reader is referred to alternative sources to obtain a basic level of understanding.

© 2020 Association of International Certified Professional Accountants 11