Mark Barnes Columnist

Fair market value (FMV) is at once a complex and simple concept. Never mind trying to value a company from first principles, in its simplest definition, FMV is the price at which a transaction concludes between a willing (and able) buyer and a willing seller. Willing buyers and sellers transact if supply equals demand — this follows from even the most rudimentary understanding of economic theory. It is this equilibrium that clears the market, that drives the efficient allocation of scarce capital. It is a founding principle, which if meddled with, will undermine the efficient working of the free market. It has been meddled with in SA. A recent report that summarised fees (transactional and advisory) paid by the Public Investment Corporation (PIC) has found its way into the public domain, and its specifics have already been well commented on. The information contained in that report shows unquestionably that grossly extravagant payments were made to parties for services that no track...

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