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VALUATION OF THE BUSINESS ENTERPRISE.

W. A. Paton
The Accounting Review 1936 11(1), 26-32
With the development of large-scale activity, elaborate technical processes, and the corporate form of organization the business enterprise has become in many cases a highly complex economic institution, and the valuation of the facilities and conditions of production in terms of the enterprise in its entirety is accordingly a bafflingly difficult problem, a problem which comprehends substantially all phases of accounting analysis and all types of value determinations. The business enterprise, it is scarcely going too far to say, is truly an organic entity, a something capable of being contemplated for its own sake and valued in its own right. The enterprise in other words, and as has often been pointed out in utility valuation cases, is an bite rated, functioning, continuing establishment, and not a mere bundle or aggregation of separate elements or parts. And the value of the enterprise, it follows, may be more or less than the sum of the values of the constituent factors, considered singly, in apparent violation of one of the more obvious mathematical axioms. Further, in view of the extent now-a-days to which both small and large blocks of securities evidencing enterprise ownership are transferred from one party to another, including the practices of acquiring whole businesses through merger and consolidation, to say nothing of the matter of proper periodic measurement in the interest of the various equities, it appears that there is some excuse for urging that more systematic and discriminating attention be given to the question of enterprise valuation as opposed to other forms of appraisals.