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Subject 2. Reasons for Performing Valuations PDF Download
Private company valuations are typically performed for three different reasons.


Valuations are performed when there are transactions that affect the ownership or financing of a private company. These transactions include private financing, initial public offering (IPO), acquisition, bankruptcy, and share-based payment (compensation).


Sometimes valuations are performed for compliance purposes. An example of financial reporting valuation is the business valuation required for goodwill impairment tests. Tax related reasons for valuations include corporate and individual tax reporting.


Many legal proceedings require valuations. Examples are shareholder disputes, property damages, and divorce.

Learning Outcome Statements

describe uses of private business valuation and explain applications of greatest concern to financial analysts;

CFA® 2023 Level II Curriculum, Volume 4, Module 27

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