M&A GLOSSARY
Valuation
Business Valuation
The process of estimating the economic value of a business, asset or security.
What does Valuation mean?
The process of estimating the economic value of a business, asset or security. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Valuation in context
An appraiser analyzes earnings, comparable sales and market conditions to value a company.
Why it matters in financing
Valuation can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related m&a terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.