International Valuation Glossary—Business Valuation

Abstract

Business valuation providers and users benefit from common understanding of terms with clearly established meanings and consistent application throughout the profession.To this end the following societies and organizations have worked collaboratively to compile definitions for the terms included in this Glossary:This Glossary updates the International Glossary of Business Valuation Terms originally published in 2001.This Glossary was developed as part of ongoing efforts to harmonize definitions for terms used in business valuation. It is intended to be a reference tool to facilitate communication within the business valuation profession and with relevant stakeholders and users. This Glossary is designed to be helpful but is neither authoritative nor prescriptive.To that end, the Glossary aims to provide a common understanding of technical terms used within the various subpractice areas of business valuation and for those operating in different markets. Users of valuation services are encouraged to familiarize themselves with the appropriate context, as not all terms are applicable to every use.It is acknowledged that terms used in different markets may vary. If any term in this glossary conflicts with a published governmental, judicial, or accounting authority, precedence should be given to the use and interpretation of terms as they appear in applicable published authoritative guidance, given the purpose of the valuation.Given that the definition for some terms in this Glossary may differ slightly based on the purpose of the valuation and jurisdiction, business valuation professionals1 should ensure they are using and disclosing the most appropriate definition for the circumstances of the engagement.Furthermore, organizations such as valuation professional organizations (VPOs), accounting regulatory bodies, tax authorities, and courts may have somewhat different definitions and interpretations. Users are also encouraged to refer to valuation texts and other relevant documents for more information and application guidance on specific terms.If the business valuation professional believes that one or more of these terms needs to be used in a manner that materially departs from this glossary, it is recommended that the term be defined as used within that valuation engagement. The use of the appropriate definition relies on the professional judgement of the business valuation professional.In determining the terms to be included in this Glossary, the following items were excluded:Users of this Glossary are cautioned that when a jurisdictional definition applies, it should take precedence over the definitions in this Glossary (one example of this might be with respect to the term “fair value”).Various valuation and accounting standards were considered in the development of this Glossary, such as International Valuation Standards (IVS), International Financial Reporting Standards (IFRS), United States Generally Accepted Accounting Principles (US GAAP), Uniform Standards of Professional Appraisal Practice (USPAP), and Statement on Standards for Valuation Services (SSVS). Although it is acknowledged that US GAAP and IFRS define certain terms related to financial reporting valuation, this Glossary does not include all such terms.The definitions provided herein are current as of the date of publication. As they are subject to change, this Glossary is intended to be updated periodically. This Glossary uses “see also” to refer to terms that are related, but not synonymous. Synonymous terms are cross-referenced with “also known as.” Contrary terms are cross-referenced using “contrast with.”This Glossary was prepared with input from the following technical advisors:A grateful acknowledgement to Carla Nunes and Marianna Todorova for their contributions and assistance with this Glossary.The above group wishes to thank the following organizations for their contribution to the review of this document: