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.
Full download: Beyond Fair Value (PDF)