Distinguish objektivierter Unternehmenswert, subjektiver Entscheidungswert, and Verkehrswert in IDW S1, and when each is used.
An advanced Valuation question — expect it in final rounds and case-heavy interviews (IB, PE, Big-4 Transaction Services).
THE SHORT ANSWER
IDW S1 separates value concepts by purpose. The objektivierter Unternehmenswert is a standardized, 'as-is' value assuming continuation of the existing concept under typified assumptions and management — used where neutrality is needed, e.g., squeeze-outs, court and tax purposes. The subjektiver (Entscheidungs-)wert reflects a specific party's circumstances — their synergies, tax position, financing — and sets the individual decision value, the ceiling/floor for that buyer or seller in negotiation. The Verkehrswert (fair market value) is the price achievable in the market between typical participants. The appraiser's role (Funktionenlehre) drives which applies: neutral expert (objektiviert), advisor (subjektiv), or arbitrator/mediator. Picking the wrong concept for the purpose is a fundamental error in German practice.
WHAT INTERVIEWERS LISTEN FOR
- ✓Objektiviert = standardized neutral value (squeeze-out/tax/court)
- ✓Subjektiv = party-specific decision value with synergies/taxes
- ✓Verkehrswert = market-achievable price
- ✓Appraiser function (Funktionenlehre) drives the concept
COMMON MISTAKES
- ✗Using subjective synergies in a squeeze-out value
- ✗Conflating the three concepts
- ✗Ignoring appraiser-function context
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