Valuation date

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Valuation date
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Valuation date, also called appraisal date or evaluation date, is the day when the official valuation of an asset made by the valuator becomes valid. Each valuation model includes the valuation date, as a key element, it additionally affects both the internal and external factors that determine the value of the company, from which the valuator will be able to collect the necessary data, such as profit and valuation forecasts. The impact on the environment, both in the aspect of macroeconomics and microeconomics may unexpectedly and suddenly change.The principle of valuation must, however, be respected and consist in indicating the day on which and to the end of which the assessment of value must be carried out. Events that take place after this date may in no case be counted and taken into account[1].

When talking about mandatory takeover bid, the valuation date is exactly the day that precedes the moment of signing the contract. In the case of public procurement, the valuation date is the day before the meeting at which the final decisions are made[2].

The date of the valuation is the moment of a cutoff for the flow of information, thanks to which it is possible to determine the value. Therefore, according to the principle, only those data that were known or knowable on the day of the assessment are taken into account, not the factors and information that occurred after that date. This is because buyers should only be informed about the market value, which was based on data known on the day of valuation. However, events after the valuation date are in some cases foreseeable and cause changes in value, which is why there are exceptions. Interviews and meetings with management do not always happen close to the valuation date, therefore the valuator must assess all factors and circumstances and determine the appropriate date, which often depends on the goal itself[3].

When it comes to taxation, the valuation date means the day on which a given tax becomes payable and, in turn, tax-related declarations become due. The valuation date for the inheritance issue is one of the following dates[4]:

  • the date on which the delivery or payment takes place,
  • the moment at which the individual acquires the rights to retain the assets for the successor,
  • the date of retention of the assets.

Footnotes

  1. Valuation Date in the Process of M&A,(2015), p.107-108
  2. Valuation Date in the Process of M&A,(2015), p.107-108
  3. Business Valuations: Why Is The Valuation Date So Important?, (2017), p.1-2
  4. Valuation Date, (2018), p.2

References

Author: Justyna Wicek