Valuation Definition

Below please find a definition of “Valuation”

Financial Analysis Training & Glossary TermsValuation: The procedure involved in evaluating and determining the market value or current worth of an asset or company is known as valuation. A professional appraiser is involved in determining the value of the asset.

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Valuation Overview

Below is a free-to-watch video module on valuation overview.  As Joseph Perella of Perella Weinberg Partners writes in his investment banking textbook, “Valuation is at the core of investment banking.  Any banker worth his salt must possess the ability to value a business in a structured and defensible manner.”  Hopefully, that highlights how important valuation is in investment banking.

This video was taken from our Certified Investment Banking Associate (CIBA) program which is the investment banking certification and training program hosted on our BusinessTraining.com platform.

Video Transcript Summary of Valuation Overview:
  1. Valuation is at the core to nearly all investment banking transactions including: mergers and acquisitions deals, an equity offering, in a debt offering, and in restructuring transactions.
  2.  There are several concepts of valuation such as: market value, intrinsic value, and book value.
  3. The total enterprise value is a measure of the complete value of a business.  
  4. To find the total enterprise value you add equity value and debt less cash balance.  
  5. It is important to use fully diluted shares.
  6. Financial maneuvers do not affect total enterprise value.
  7.  There are three common valuation techniques: the comparable company analysis, the discounted cash flow analysis, and the precedent transaction analysis.  
  8. Other valuation techniques include: the leveraged buyout analysis, accretion/dilution analysis, and contribution analysis.  
In other free financial training videos we will explain some of the more complicated concepts discussed in this video.   Until then, I hope that this video has provided you a strong valuation overview.  

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