The standard measure of value used in business valuation.

Business value definition establishes a standard measure of value used to determine the business worth. Choosing a standard of value lets you answer the following question:

For whom is the business value determined?

The most common standards of value used in small business valuation are:

• Fair market value
• Investment value
• Intrinsic value

Business valuation depends on how business value is defined

Different standards of value may lead you to different conclusions as to what a business is worth. It is not surprising, for example, that an investor focused on purely financial returns may value a business differently than an entrepreneur looking to fulfill personal goals.

Market-based business valuation methods, such as the ValuAdder Market Comps, generally rely on the fair market value standard. The income-based valuation methods let you choose which business valuation standard to apply.