Business valuation is the systematic process of determining the economic worth of an entire enterprise or its underlying equity. It provides the foundation for investment decisions, mergers and acquisitions, and capital allocation.

Core Valuation Concepts

• Enterprise Value (EV): The total value of a company’s core operational business, representing the theoretical cost to acquire the entire firm (both debt and equity).
• Equity Value: The value of the company attributable strictly to common shareholders after all liabilities are paid off.
• The Valuation Triad: Valuation methods are broadly grouped into three categories: Intrinsic (Inherent cash generation), Relative (Market comparisons), and Asset-Based (Liquidation values).
• Value Drivers: Factors that directly alter a firm’s worth, primarily its revenue growth rate, operating profit margin, capital efficiency, and cost of capital.