Common terms

Valuation/Appraisal

A Business Appraisal is the examination of a business or company with the purpose of establishing an opinion as to the fair market value , or given range in fair market value of the business or company at a given point in time.

Often considered more of an art rather than an exact science when properly conducted is simply an expression of informed opinion based on fact and judgement. By their very nature appraisals or valuations are not precise and generally the opinions are stated as a range of values.

Enterprise Value

The term Enterprise Value is an economic measure of the market value of a whole business. It is one of the fundamental metrics in business valuation. All the components of the enterprise are taken at market value not book value which some suggest is the opportunistic component to the metric.

A simplified way to understand enterprise value is to envisage purchasing an entire business and paying out all the security holders, the net value remaining is the Enterprise Value.

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