INTERPRETING DIFFERENT CONCEPTS OF VALUATION
The value of a business can be basically linked to three major factors:
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Current Operations
Future Prospects
Embedded Risk
The definition of value may also vary depending on the context and objective of the valuation
exercise.
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Intrinsic Value – refers to the perceived or calculated value of an asset, investment, or
entity based on its fundamental characteristics and inherent attributes.
Going Concern Value – refers to the value of a business entity as an ongoing,
operational concern rather than as a sum of its individual assets. It reflects the idea that a
business has the potential to continue its operation and generate profits into the
foreseeable future.
Liquidation Value – refers to the estimated value of an asset or a company’s assets when
they are sold quickly.
Fair Market Value – is the estimated price at which an asset would change hands
between a willing buyer and a willing seller, in which both have reasonable knowledge of
the relevant facts and neither of whom is under any compulsion to buy or sell.