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Market-based valuation

Market-based valuation

A market-based valuation means a company is valued by comparison with similar companies or transactions.

What is a market-based valuation?

A market-based valuation (Swedish: marknadsbaserad värdering), sometimes called relative valuation or multiples valuation, is based on what similar companies are worth or have sold for. Ratios known as multiples are applied to the company's own figures to give a reasonable, comparable view of value. It complements methods such as net asset value.

 

Market-based valuation for unlisted companies

Unlisted shares have no market price, which makes comparisons important, for example in a new share issue or a sale. It is more reliable when the share count in the cap table is correct.

Learn more about cap tables
Henrik Kristensen, NVR
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Related terms

Valuation

A valuation is an estimate of what a company or a shareholding is worth.

Net asset value

Net asset value is the value of a company's assets minus its liabilities.

Unlisted shares

Unlisted shares are shares in companies that are not listed on a stock exchange or trading venue.

Due diligence

Due diligence is a review of a company carried out ahead of an investment or acquisition.