International Valuation Standards (IVS)

The process of estimating the economic value of a company's active user community, considering metrics such as engagement levels, conversion rates, lifetime value, and network effects. User base valuation is central to the assessment of platform businesses and social media companies, where the user community itself is the primary intangible asset.

A ratio used to estimate the value of a company by comparing its market value or enterprise value to a financial metric such as revenue, EBITDA, or earnings. Higher multiples typically reflect stronger growth prospects, margin quality, and intangible asset positions.

A valuation methodology that determines the total value of a diversified company by independently valuing each business segment, product line, or asset category and aggregating the results. Sum-of-the-parts analysis is particularly useful when a conglomerate's divisions operate in different industries with distinct risk profiles, growth rates, and comparable company sets.

The valuation of a company immediately after a new funding round, calculated as the pre-money valuation plus the capital raised. Post-money valuation determines the ownership percentage that new investors receive for their investment.

Book value is the net asset value of a company as recorded on its balance sheet — total assets minus total liabilities. The formula is simple: Book Value = Total Assets − Total Liabilities.

A set of measurement guidelines and statistical standards developed by the Organisation for Economic Co-operation and Development for comparing productivity across countries and sectors. The OECD framework addresses the treatment of intangible investment, quality adjustment, and multi-factor productivity, providing the foundation for international productivity benchmarking.

A reasonableness check performed in purchase price allocations to verify that the weighted average rate of return across all identified assets (tangible, intangible, and goodwill) is consistent with the overall weighted average cost of capital (WACC) used in the transaction. If WARA materially deviates from WACC, it indicates that the individual asset returns or relative values require adjustment.

An international regulatory framework developed by the Basel Committee on Banking Supervision that sets minimum capital requirements, leverage ratios, and liquidity standards for banks. Basel III was introduced in response to the 2008 financial crisis and requires banks to hold higher-quality capital (primarily Common Equity Tier 1) against risk-weighted assets, including operational risk and market risk.

Pre-Revenue Startup Valuation: Intangible Asset Methods That Actually Work

Pre-revenue startups are notoriously difficult to value using traditional methods. Revenue multiples fail when there is no revenue. DCF models rely on projections that are mostly fiction. Intangible asset valuation offers a third path — grounded in what a startup has actually built, not what it hopes to earn.

What is post-money valuation?

Post-money valuation is the implied total value of a company after a funding round closes — it equals pre-money valuation plus the investment amount.

What is pre-money valuation?

Pre-money valuation is the implied value of a company before new investment. It determines how much equity an investor receives for their cheque.

How do you calculate pre-money and post-money valuation?

Pre-money valuation is the company's value before investment; post-money equals pre-money plus the investment amount. If a company raises £2M at a £8M pre-money valuation, post-money is £10M and the investor owns 20%.