Case 1:20-cv-00393-LO-TCB Document 1093-11 Filed 02/25/22 Page 1 of 49 PageID# 29990
`Case 1:20-cv-00393-LO-TCB Document 1093-11 Filed 02/25/22 Page 1 of 49 PagelD# 29990
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`
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`EXHIBIT 11
`EXHIBIT 11
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`

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`American Society of Appraisers
`
`ASA Business Valuation
`Standards
`
`This release of the approved ASA Business Valuation Standards of the American Society of Appraisers
`contains all standards approved through November 2009, and is to be used in conjunction with the Uniform
`Standards of Professional Appraisal Practice (USPAP) of The Appraisal Foundation and the Principles of
`Appraisal Practice and Code of Ethics of the American Society of Appraisers. Periodic updates to these
`Standards are posted to the Business Valuation Committee’s website www.bvappraisers.org.
`
`The ASA Business Valuation Standards, including Statements on Business Valuation Standards, Advisory
`Opinions and Procedural Guidelines have been published and/or revised as indicated in the following Table of
`Contents.
`
`TABLE OF CONTENTS
`
`Item
`
`Title
`
`GENERAL PREAMBLE
`
`Page
`
`4
`
`Effective Date
`
`September 1992
`Revised January 1994
`Revised February 2001
`Revised August 2002
`Revised January 2004
`Revised July 2008
`
`ASA BUSINESS VALUATION STANDARDS (BVS)
`(Standards provide minimum criteria for developing and reporting on
`the valuation of businesses, business ownership interests, or securities)
`
`BVS-I
`
`General Requirements for Developing a
`Business Valuation
`
`BVS-II
`
`Financial Statement Adjustments
`
`BVS-III
`
`Asset-Based Approach to
`Business Valuation
`
`5
`
`8
`
`9
`
`January 1992
`Revised June 1993
`Revised January 1994
`Revised January 1996
`Revised February 2001
`Revised July 2008
`
`September 1992
`Revised January 1994
`Revised February 2001
`Revised July 2008
`
`January 1992
`Revised January 1994
`Revised February 2001
`Revised August 2002
`Revised July 2008
`
`Page 1
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`ASA Business Valuation Standards
`© 2009 American Society of Appraisers
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`Item
`
`Title
`
`Effective Date
`
`Page
`
`BVS-IV
`
`Income Approach to Business Valuation
`
`BVS-V
`
`Market Approach to Business Valuation
`
`BVS-VI
`
`Reaching a Conclusion of Value
`
`BVS-VII
`
`Valuation Discounts and Premiums
`
`BVS-VIII
`
`Comprehensive Written Business
`Valuation Report
`
`September 1992
`Revised January 1994
`Revised February 2001
`Revised July 2008
`
`September 1992
`Revised January 1994
`Revised February 2001
`Revised July 2008
`
`September 1992
`Revised January 1994
`Revised February 2001
`Revised August 2002
`Revised July 2008
`
`January 1996
`Revised February 2001
`Revised July 2008
`
`June 1991
`Revised January 1994
`Revised February 2001
`Revised July 2008
`
`BVS-IX
`
`Intangible Asset Valuation
`
`July 2008
`
`GLOSSARY
`
`January 1989
`Revised September 1992
`Revised June 1993
`Revised January 1994
`Revised February 2001
`Revised June 2002
`Revised January 2004
`Revised July 2005
`Revised July 2008
`
`STATEMENTS ON ASA BUSINESS VALUATION STANDARDS (SBVS)
`(Statements clarify, interpret, explain, or elaborate on Standards and
`have the full weight of Standards)
`
`SBVS-1
`
`Guideline Public Company Method
`
`SBVS-2
`
`Guideline Transactions Method
`
`January 1992
`Revised January 1994
`Revised February 2001
`Revised July 2001
`Revised January 2004
`Revised July 2008
`
`January 2004
`Revised July 2008
`
`10
`
`12
`
`14
`
`16
`
`17
`
`20
`
`24
`
`33
`
`35
`
`Page 2
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`Item
`
`Title
`
`Effective Date
`
`Page
`
`ADVISORY OPINIONS (AO)
`(Advisory Opinions illustrate the applicability of Standards and
`Statements in specific situations, offer advice for the resolution of
`valuation issues, and are not binding)
`
`AO-1
`
`Financial Consultation and
`Advisory Services
`
`February 1997
`Revised February 2001
`Revised July 2008
`
`PROCEDURAL GUIDELINES (PG)
`(Procedural Guidelines suggest certain procedures that may be used in the
`conduct of an assignment and are not binding)
`
`PG-1
`
`PG-2
`
`Litigation Support: Role of the
`Independent Financial Expert
`
`Valuation of Partial Ownership
`Interests
`
`July 2001
`Revised July 2008
`
`November 2009
`
`37
`
`38
`
`43
`
`Published by:
`Business Valuation Committee
`American Society of Appraisers
`555 Herndon Parkway, Suite 125
`Herndon, VA 20170
`
`Page 3
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`ASA Business Valuation Standards
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`General Preamble
`
`I.
`
`II.
`
`III.
`
`IV.
`
`V.
`
`VI.
`
`The American Society of Appraisers, through its Business Valuation Committee, has adopted these
`ASA Business Valuation Standards and Definitions (“the Standards”) in order to maintain and
`enhance the quality of business valuations for the benefit of the business valuation profession and
`users of business valuations.
`
`The American Society of Appraisers, in its Principles of Appraisal Practice and Code of Ethics, and
`The Appraisal Foundation, in its Uniform Standards of Professional Appraisal Practice (“USPAP”),
`have established authoritative principles and a code of professional ethics. These Standards
`incorporate the Principles of Appraisal Practice and Code of Ethics and the relevant portions of
`USPAP, either explicitly or by reference, and are designed to clarify them and provide additional
`requirements specifically applicable to the valuation of businesses, business ownership interests,
`securities and intangible assets.
`
`These Standards incorporate all relevant business valuation standards adopted by the American
`Society of Appraisers through its Business Valuation Committee.
`
`These Standards provide minimum criteria to be followed by business appraisers in developing and
`reporting the valuation of businesses, business ownership interests, securities and intangible assets.
`
`If, in the opinion of the appraiser, the circumstances of a specific business valuation assignment
`dictate a departure from any provision of any Standard, such departure must be disclosed and will
`apply only to the specific provision.
`
`These Standards are designed to provide guidance to ASA members and to provide a structure for
`regulating the development and reporting of business valuations through uniform practices and
`procedures. Deviations from the Standards are not intended to form the basis of any civil liability and
`should not create any presumption or evidence that a legal duty has been breached. Moreover,
`compliance with these Standards does not create any special relationship between the appraiser and
`any other person.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-I General Requirements for Developing a
`Business Valuation
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the general requirements for developing
`the valuation of businesses, business ownership interests, securities and intangible assets.
`
`C. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. Appropriate definition of the assignment
`
`A. Business valuation is the act or process of determining the value of a business enterprise or
`ownership interest therein.
`
`B.
`
`In developing a valuation of a business, business ownership interest, security, or intangible asset,
`an appraiser must identify and define, as appropriate:
`1. The client and other intended users
`2. The purpose or intended use of the appraisal
`3. The type of engagement as defined in BVS-I General Requirements for Developing a
`Business Valuation, Section II.C
`4. The business enterprise to which the valuation relates
`5. The type of entity (e.g., corporation, limited liability company, partnership or other)
`6. The state or jurisdiction of incorporation, if applicable
`7. The principal business location (or headquarters)
`8. The business interest under consideration
`9. The standard of value applicable to the valuation (e.g., fair market value, fair value,
`investment value, or other)
`10. The premise of value (e.g., going concern, liquidation, or other)
`11. The level of value (e.g., strategic control, financial control, marketable minority, or
`nonmarketable minority) in the context of the standard of value, the premise of value, and
`the relevant characteristics of the interest
`12. The effective (or “as of”) date of the appraisal
`13. Any extraordinary assumptions used in the assignment
`14. Any hypothetical conditions used in the assignment
`
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`C. The nature and type of the engagement must be defined. An acceptable type of engagement will
`generally be one of the three types detailed below. Other types of engagements should be
`explained and described.
`
`1. Appraisal
`
`a. An Appraisal is the act or process of determining the value of a business, business
`ownership interest, security, or intangible asset.
`b. The objective of an appraisal is to express an unambiguous opinion as to the value of a
`business, business ownership interest, security or intangible asset which opinion is
`supported by all procedures that the appraiser deems to be relevant to the valuation.
`c. An appraisal has the following qualities:
`(1) Its conclusion of value is expressed as either a single dollar amount or a range
`(2) It considers all relevant information as of the appraisal date available to the
`appraiser at the time of performance of the valuation
`(3) The appraiser conducts appropriate procedures to collect and analyze all
`information expected to be relevant to the valuation
`(4) The valuation considers all conceptual approaches deemed to be relevant by the
`appraiser
`2. Limited appraisal
`
`a. The objective of a limited appraisal is to express an estimate as to the value of a business,
`business ownership interest, security or intangible asset. The development of this
`estimate excludes some additional procedures that are required in an appraisal.
`b. A limited appraisal has the following qualities:
`(1) Its conclusion of value is expressed as either a single dollar amount or a range
`(2) It is based upon consideration of limited relevant information
`(3) The appraiser conducts only limited procedures to collect and analyze the
`information that such appraiser considers necessary to support the conclusion
`presented
`(4) The valuation is based upon the conceptual approach(es) deemed by the
`appraiser to be most appropriate
`
`3. Calculation
`
`a. The objective of a calculation is to provide an approximate indication of value of a
`business, business ownership interest, security or intangible asset based on the
`performance of limited procedures agreed upon by the appraiser and the client.
`b. A calculation has the following qualities:
`(1) It’s result may be expressed as either a single dollar amount or a range
`(2) It may be based upon consideration of only limited relevant information
`(3) The appraiser collects limited information and performs limited analysis
`(4) The calculation may be based upon conceptual approaches agreed upon with the
`client
`
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`III. Information collection and analysis
`
`The appraiser shall gather, analyze and adjust the relevant information necessary to perform a
`valuation appropriate to the nature or type of the engagement. Such information shall include:
`
`A. Characteristics of the business, business ownership interest, security or intangible asset to be
`valued, including rights, privileges, conditions, quantity, factors affecting control and agreements
`restricting sale or transfer
`
`B. The nature, history and outlook of the business
`
`C. Historical financial information for the business
`
`D. Assets and liabilities of the business
`
`E. The nature and conditions of relevant industries that have an impact on the business
`
`F. Economic factors affecting the business
`
`G. Capital markets providing relevant information; e.g., available rates of return on alternative
`investments, relevant public stock market information and relevant merger and acquisition
`information
`
`H. Prior transactions involving the subject business, or involving interests in, the securities of, or
`intangible assets in the subject business
`
`I. Other information deemed by the appraiser to be relevant
`
`IV. Approaches, methods and procedures
`
`A. The appraiser shall select and apply appropriate valuation approaches, methods and procedures.
`
`B. The appraiser shall develop a conclusion of value pursuant to the valuation assignment as
`defined, considering the relevant valuation approaches, methods and procedures, the information
`available and appropriate premiums and discounts, if any.
`
`V. Documentation and retention
`
`The appraiser shall appropriately document and retain all information relied on and the work product
`used in reaching a conclusion.
`
`VI. Reporting
`
`The appraiser shall report the appraisal conclusions to the client in an appropriate written or oral
`format. Other than preliminary communications of results to a client, reporting on valuation
`calculations, or reporting on engagements that do not result in conclusions of value, the report must
`meet the requirements of Standard 10 of the Uniform Standards of Professional Appraisal Practice. In
`the event the assignment results in a Comprehensive Written Business Valuation Report, the report
`shall meet the requirements of BVS-VIII Comprehensive Written Business Valuation Report.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-II Financial Statement Adjustments
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for making financial
`statement adjustments in the valuation of businesses, business ownership interests, securities
`and intangible assets.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. Conceptual framework
`
`A. As a procedure in the valuation process, financial statements should be analyzed and, if
`appropriate, adjusted. Financial statements to be analyzed include those of the subject entity and
`any entities used as guideline companies.
`
`B. Financial statement adjustments are modifications to reported financial information that are
`relevant and significant to the appraisal process. Adjustments may be appropriate for the
`following reasons, among others:
`1. To present financial data of the subject and guideline companies on a consistent basis
`
`2. To adjust from reported values to current values
`
`3. To adjust revenues and expenses to levels that are reasonably representative of continuing
`results
`
`4. To adjust for non-operating assets and liabilities, and any revenues and expenses related
`to the non-operating items
`
`C. Financial statement adjustments are made for the sole purpose of assisting the appraiser in
`reaching a conclusion of value.
`
`III. Documentation of adjustments
`
`All adjustments made should be fully described and supported.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-III Asset-Based Approach to Business Valuation
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for the use of the asset-
`based approach (and the circumstances in which it is appropriate) in the valuation of businesses,
`business ownership interests, securities and intangible assets, but not the reporting thereof.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. The asset-based approach
`
`A. The asset-based approach is a general way of determining a value indication of a business,
`business ownership interest, security, or intangible asset using one or more methods based on the
`value of the assets net of liabilities.
`
`B.
`
`In business valuation, the asset-based approach may be analogous to the cost approach of other
`appraisal disciplines.
`
`C. Assets, liabilities and equity relate to a business that is an operating company, a holding
`company, or a combination thereof (a mixed business).
`1. An operating company is a business that conducts an economic activity by generating and
`selling, or trading in a product or service.
`
`2. A holding company is a business that derives its revenues from a return on its assets,
`which may include operating companies and/or other businesses.
`
`3. The asset-based approach should be considered in valuations conducted at the enterprise
`level and involving:
`
`a. An investment or real estate holding company
`
`b. A business appraised on a basis other than as a going concern
`
`Valuations of particular ownership interests in an enterprise may or may not require the use of
`the asset based approach.
`
`D. The asset-based approach should not be the sole appraisal approach used in assignments relating
`to operating companies appraised as going concerns unless this approach is customarily used by
`sellers and buyers. In such cases, the appraiser must support the selection of this approach.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-IV Income Approach to Business Valuation
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for the use of the income
`approach in the valuation of businesses, business ownership interests, securities and intangible
`assets, but not the reporting thereof.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. The income approach
`
`A. The income approach is a general way of determining a value indication of a business, business
`ownership interest, security, or intangible asset by using one or more methods through which
`anticipated benefits are converted into value.
`
`B. Both capitalization of benefits methods and discounted future benefits methods are acceptable. In
`capitalization of benefits methods, a representative benefit level is divided or multiplied by an
`appropriate capitalization factor to convert the benefit to value. In discounted future benefits
`methods, benefits are estimated for each of several future periods. These benefits are converted to
`value by applying an appropriate discount rate and using present value procedures.
`
`III. Anticipated benefits
`
`A. Anticipated benefits, as used in the income approach, are expressed in monetary terms.
`Anticipated benefits may be reasonably represented by such items as dividends or distributions,
`or various forms of earnings or cash flow.
`
`B. Anticipated benefits should be estimated by considering such items as the nature, capital
`structure and historical performance of the related business entity, the expected future outlook
`for the business entity and relevant industries, and relevant economic factors.
`
`IV. Conversion of anticipated benefits
`
`A. Anticipated benefits are converted to value by using procedures that consider the expected growth
`and timing of the benefits, the risk profile of the benefits stream and the time value of money.
`
`B. The conversion of anticipated benefits to value normally requires the determination of a
`capitalization factor or discount rate. In that determination, the appraiser should consider such
`factors as the level of interest rates, the rates of return expected by investors on alternative
`investments and the specific risk characteristics of the anticipated benefits.
`
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`C.
`
`In discounted future benefits methods, expected growth is considered in estimating the future
`stream of benefits. In capitalization of benefits methods, expected growth is incorporated in the
`capitalization factor.
`
`D. The capitalization factors or discount rates should be consistent with the types of anticipated
`benefits used. For example, pre-tax factors or discount rates should be used with pre-tax benefits,
`common equity factors or discount rates should be used with common equity benefits and net
`cash flow factors or discount rates should be used with net cash flow benefits.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-V Market Approach to Business Valuation
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for the use of the market
`approach in the valuation of businesses, business ownership interests, securities and intangible
`assets, but not the reporting thereof.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. The market approach
`
`A. The market approach is a general way of determining a value indication of a business, business
`ownership interest, security or intangible asset by using one or more methods that compare the
`subject to similar businesses, business ownership interests, securities or intangible assets that
`have been sold.
`
`B. Examples of market approach methods include the Guideline Public Company Method (see
`SBVS-1) and the Guideline Transactions Method (see SBVS-2).
`
`III. Reasonable basis for comparison
`
`A. The business, business ownership interest, security or intangible asset used for comparison must
`serve as a reasonable basis for comparison to the subject.
`
`B. Factors to be considered in judging whether a reasonable basis for comparison exists include:
`1. A sufficient similarity of qualitative and quantitative investment characteristics
`
`2. The amount and verifiability of data known about the similar investment
`
`3. Whether or not the price of the similar investment was observed in an arm’s-length
`transaction, or in a forced or distressed sale
`
`IV. Selection of valuation ratios
`
`A. Comparisons are normally made through the use of valuation ratios. The computation and use of
`such ratios should provide meaningful insight about the value of the subject, considering all
`relevant factors. Accordingly, care should be exercised with respect to issues such as:
`1. The selection of the underlying data used to compute the valuation ratios
`
`2. The selection of the time periods and/or the averaging methods used for the underlying
`data
`
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`3. The computation of the valuation ratios
`
`4. The timing of the price data used in the valuation ratios (in relationship to the effective
`date of the appraisal)
`
`5. How the valuation ratios were selected and applied to the subject's underlying data
`
`B.
`
`In general, comparisons should be made by using comparable definitions of the components of
`the valuation ratios. However, where appropriate, valuation ratios based on components that are
`reasonably representative of ongoing results may be used.
`
`V. Rules of thumb
`
`Rules of thumb may provide insight into the value of a business, business ownership interest, security
`or intangible asset. However, value indications derived from the use of rules of thumb should not be
`given substantial weight unless they are supported by other valuation methods and it can be
`established that knowledgeable buyers and sellers place substantial reliance on them.
`
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-VI Reaching a Conclusion of Value
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for reaching a final
`conclusion of value in the valuation of businesses, business ownership interests, securities and
`intangible assets.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`II. General
`
`A. The conclusion of value reached by the appraiser shall be based upon the applicable standard of
`value, the purpose and intended use of the valuation, and all relevant information available as of
`the valuation date in carrying out the type of engagement for the assignment.
`
`B. The conclusion of value reached by the appraiser will be based on value indications resulting from
`one or more methods performed under one or more appraisal approaches.
`
`III. Selection and weighting of methods
`
`A. The selection of and reliance on appropriate methods and procedures depends on the judgment of
`the appraiser and not on any prescribed formula. One or more approaches may not be relevant to
`a particular situation, and more than one method under an approach may be relevant.
`
`B. The appraiser must use informed judgment when determining the relative weight to be accorded
`to indications of value reached on the basis of various methods, or whether an indication of value
`from a single method should be conclusive. The appraiser's judgment may be presented either in
`general terms or in terms of mathematical weighting of the indicated values reflected in the
`conclusion. In any case, the appraiser should provide the rationale for the selection or weighting
`of the method or methods relied on in reaching the conclusion.
`
`C.
`
`In assessing the relative importance of indications of value determined under each method, or
`whether an indication of value from a single method should dominate, the appraiser should
`consider factors such as:
`1. The applicable standard of value
`
`2. The purpose and intended use of the valuation
`
`3. Whether the subject is an operating company, a real estate or investment holding
`company, or a company with substantial non-operating or excess assets
`
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`30005
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`4. The quality and reliability of data underlying the indication of value
`
`5. Such other factors that, in the opinion of the appraiser, are appropriate for consideration
`
`IV. Additional factors to consider
`
`As appropriate for the valuation assignment as defined, and if not considered in the process of
`determining and weighting the indications of value provided by various procedures, the appraiser
`should separately consider the following factors in reaching a final conclusion of value:
`
`A. Marketability or lack thereof, considering the nature of the business, the business ownership
`interest, security or intangible asset
`
`B. The effect of relevant contractual and/or other legal restrictions
`
`C. The condition of the market(s) in which the appraised interest might trade
`
`D. The ability of an owner of the appraised interest to control the operation, sale, or liquidation of
`the relevant business
`
`E. Such other factors that, in the opinion of the appraiser, are appropriate for consideration
`
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`30006
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`AMERICAN SOCIETY OF APPRAISERS
`ASA Business Valuation Standards
`
`BVS-VII Valuation Discounts and Premiums
`
`I. Preamble
`
`A. This Standard must be followed in all valuations of businesses, business ownership interests,
`securities and intangible assets developed by all members of the American Society of Appraisers,
`be they Candidates, Accredited Members (AM), Accredited Senior Appraisers (ASA), or Fellows
`(FASA).
`
`B. The purpose of this Standard is to define and describe the requirements for the use of discounts
`and premiums whenever they are applied in the valuation of businesses, business ownership
`interests, securities and intangible assets.
`
`C. This Standard applies to appraisals and may not necessarily apply to limited appraisals and
`calculations as defined in BVS-I General Requirements for Developing a Business Valuation,
`Section II.C.
`
`D. This Standard incorporates the General Preamble to the ASA Business Valuation Standards.
`
`E. This Standard applies at any time in the valuation process, whether within a method, to the value
`indicated by a valuation method, or to the result of weighting or correlating methods.
`
`II. The concepts of discounts and premiums
`
`A. A discount has no meaning until the conceptual basis underlying the base value to which it is
`applied is defined.
`
`B. A premium has no meaning until the conceptual basis underlying the base value to which it is
`applied is defined.
`
`C. A discount or premium is warranted when characteristics affecting the value of the subject
`interest differ sufficiently from those inherent in the base value to which the discount or premium
`is applied.
`
`D. A discount or premium quantifies an adjustment to account for differences in characteristics
`affecting the value of the subject interest relative to the base value to which it is compared.
`
`III. The application of discounts and premiums
`
`A. The purpose, applicable standard of value, or other circumstances of an appraisal may indicate
`the need to account for