USPAP 2018-2019 Edition
© The Appraisal Foundation
(a) An appraiser must develop value opinion(s) and conclusion(s) by use of one or more approaches that are
necessary for credible assignment results.
(b) An appraiser must, when necessary for credible assignment results, analyze the effect on value, if any, of:
the nature and history of the business enterprise or intangible asset;
financial and economic conditions affecting the business enterprise or intangible asset, its industry,
and the general economy;
(iii) past results, current operations, and future prospects of the business enterprise;
(iv) past sales of capital stock or other ownership interests in the business enterprise or intangible
asset being appraised;
sales of capital stock or other ownership interests in similar business enterprises;
(vi) prices, terms, and conditions affecting past sales of similar ownership interests in the asset being
appraised or a similar asset; and
(vii) economic benefit of tangible and intangible assets.
Comment on (i)-(vii): This Standards Rule directs the appraiser to study the prospective and retrospective aspects of
the business enterprise and to study it in terms of the economic and industry environment within which it operates.
(c) An appraiser must, when necessary for credible assignment results, analyze the effect on value, if any,
of buy-sell and option agreements, investment letter stock restrictions, restrictive corporate charter or
partnership agreement clauses, and similar features or factors that may influence value.
(d) An appraiser must, when necessary for credible assignment results, analyze the effect on value, if any, of the
extent to which the interest appraised contains elements of ownership control and is marketable and/or liquid.
Comment: An appraiser must analyze factors such as holding period, interim benefits, and the difficulty and
cost of marketing the subject interest.
Equity interests in a business enterprise are not necessarily worth the pro rata share of the business enterprise
interest value as a whole. Also, the value of the business enterprise is not necessarily a direct mathematical
extension of the value of the fractional interests. The degree of control, marketability and/or liquidity or lack
thereof depends on a broad variety of facts and circumstances that must be analyzed when applicable.
STANDARDS RULE 9-5
In developing an appraisal of an interest in a business enterprise or intangible asset, an appraiser must:
(a) reconcile the quality and quantity of data available and analyzed within the approaches, methods, and
procedures used; and
(b) reconcile the applicability and relevance of the approaches, methods and procedures used to arrive at
the value conclusion(s).
Comment: The value conclusion is the result of the appraiser’s judgment and not necessarily the result of a