Business & Finance Glossary: V
13 terms starting with V, from a glossary of 638 definitions covering intangible assets, valuations, and key financial concepts.
Valuation Multiple
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.
Read more →Value Bridge
A visual and analytical framework that reconciles the difference between two valuations — typically entry and exit, or book value and market value — by attributing value changes to specific drivers such as revenue growth, margin improvement, multiple expansion, and intangible asset creation. Value bridges are widely used in private equity reporting and portfolio company management.
Read more →Value Creation Plan
A structured strategy developed by private equity firms or management teams to systematically increase the value of a business over a defined holding period. Value creation plans typically address revenue growth, margin improvement, operational efficiency, and intangible asset development.
Read more →Value Driver Tree
A hierarchical diagram that breaks down a company's enterprise value into its component financial and operational drivers, mapping how inputs such as customer acquisition, pricing, retention, and productivity combine to produce revenue, profit, and cash flow. Value driver trees are essential for identifying where intangible asset investments create the greatest impact.
Read more →Value in Use
The present value of the future cash flows expected to be derived from an asset or cash generating unit, calculated using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Under IAS 36, value in use is one of two measures (alongside fair value less costs of disposal) used to determine recoverable amount for impairment testing. Cash flow projections must be based on reasonable and supportable assumptions and should not exceed five years unless a longer period can be justified.
Read more →Vendor Due Diligence (VDD)
A comprehensive due diligence exercise commissioned and paid for by the seller of a business prior to a sale process, with the resulting reports made available to prospective buyers. VDD typically covers financial, tax, commercial, and legal matters and is prepared by independent professional advisors. It accelerates the sale process, reduces the number of buyer due diligence queries, provides the seller with greater control over the information flow, and can support a higher valuation by pre-addressing potential buyer concerns.
Read more →Vendor Loan Note
A vendor loan note (also called vendor finance or a deferred loan note) is an arrangement in which the seller of a business lends part of the purchase price back to the buyer, to be repaid over time with interest. Instead of receiving the whole price in cash at completion, the seller takes a loan note for a portion of it, which the buyer pays down from the acquired business's cash flow. Vendor loan notes help bridge a gap between the price a seller wants and the cash a buyer can raise, and they signal the seller's confidence in the business. For the buyer they reduce the upfront funding required and align the seller with a smooth handover; for the seller they carry credit risk, since repayment depends on the buyer's continued solvency, which is why reverse due diligence and appropriate security matter. Vendor loan notes are common in UK owner-managed business sales and management buyouts.
Read more →Venture Capital (VC)
A form of private equity financing provided to early-stage, high-growth potential companies in exchange for equity. VC firms typically invest across multiple rounds (seed through Series C+), provide strategic guidance, and target returns through exits within 5-10 years.
Read more →Venture Debt
A form of debt financing available to venture-backed startups that supplements equity financing without requiring the dilution of additional equity rounds. Venture debt is typically structured as term loans with warrants giving the lender the right to purchase equity, and is used to extend runway, finance equipment, or bridge between funding rounds. Providers include specialist lenders such as Silicon Valley Bank and Kreos Capital.
Read more →Vesting
The process by which an employee or founder earns full ownership of equity over time, typically over a 3-4 year schedule. Vesting aligns long-term incentives with commitment and usually includes a cliff period (often 12 months) before any equity vests. Vesting schedules are particularly important in intangible-rich companies, where key personnel hold significant knowledge, customer relationships, and technical expertise that are critical to the organisation's competitive position.
Read more →Vintage Diversification
An investment strategy that spreads private equity or venture capital commitments across multiple fund vintage years to reduce the impact of any single economic cycle on portfolio performance. Vintage diversification is a core principle of institutional portfolio construction and helps smooth the J-curve effect inherent in illiquid fund investments.
Read more →Vintage Year
The year in which a private equity or venture capital fund makes its first investment or first capital call, used to classify and compare fund performance across different economic and market cycles. Vintage year analysis is essential for benchmarking because funds launched in different years face different entry valuations, exit environments, and macroeconomic conditions. Industry benchmarks from organisations such as Cambridge Associates and Preqin are organised by vintage year.
Read more →VPGA 6
VPGA 6 is the RICS Red Book Valuation Practice Guidance Application that governs the valuation of intellectual property rights, including the specialist scenario of intangible assets pledged as loan collateral. It sits within the RICS Valuation - Global Standards (Red Book) and works alongside the RICS professional standard "Valuation of intellectual property rights" (2020) and the International Valuation Standards, so that vpga 6 intangible assets work is delivered to a consistent, auditable credit standard rather than an informal estimate. Its Appendix A, "Valuations supporting IP debt financing", is the part lenders care about most: it directs the valuer towards an orderly-liquidation or forced-sale premise for collateral, and it warns that a single "most likely" figure must never obscure downside outcomes. In practice this means the report should present value ranges and sensitivity analysis, and adopt deliberately conservative inputs for lending purposes - a low-end royalty rate, a risk-weighted discount rate, a finite economic life rather than a perpetuity, and cautious or absent terminal value. For a lender, a VPGA 6-compliant report is the difference between a defensible security valuation and one that collapses under scrutiny in an insolvency. For a borrower, it disciplines expectations: the figure supporting a facility is not the same as a headline going-concern valuation. A worked UK example is NatWest's High Growth IP Loan, where the pledged IP is appraised and revalued annually by an independent valuer against exactly this kind of conservative, standards-based framework before a facility of £250k to £10m is advanced at up to around half of appraised IP value. Accountants and corporate-finance advisers preparing a client for IP-backed borrowing should ensure their valuer is instructed on a Red Book, VPGA 6 basis so the report is fit for a credit committee, not merely for management accounts.
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