We begin with a brief overview of different company valuation approaches. This article presents the main functions (decision, arbitration, and argument or negotiation function) of company valuation according to the functional (i.e. purpose-oriented) theory. The main body of the article focuses on the decision function and shows how the decision value can be derived as a subjective limit value that different economic agents assign to the company. Finally, we discuss the differences between the functional and the fair market value approaches.
Beyond Fair Value
Carlos A. Abadi
Carlos is a 30-year veteran international investment banker who pioneered a number of financial products, such as the trading and swapping of emerging markets sovereign loans in the wake of the 1982 Mexican debt crisis, the trading market for derivatives on emerging markets bonds and loans, the first non-dilutive CET1 transaction compliant with Basel III rules, and the first Chapter 11 filing for a Latin American issuer.Discover more