CVA (Mile2 Cybersecurity Certifications) key terms

The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion, both having reasonable knowledge of relevant facts. It is the standard of value most often used in tax and litigation contexts.

The definition that specifies what a valuation is measuring, such as fair market value, fair value, investment value, or intrinsic value. Choosing the wrong standard changes the entire analysis and conclusion.

A standard of value whose meaning depends on context. In financial reporting it is an exit price in an orderly market; in dissenting-shareholder statutes it often excludes minority and marketability discounts.

The value of an asset to a particular owner or prospective owner given that party's specific investment requirements and expectations. It can differ from fair market value because it reflects individual synergies and constraints.

A family of valuation methods that convert expected future economic benefits into a present value. It includes discounted cash flow analysis, capitalization of earnings, and excess earnings techniques.

A valuation approach that estimates value by comparing the subject to prices paid for similar assets or businesses. Common methods are guideline public companies, guideline transactions, and prior arm's-length sales.

A valuation approach that measures value by adjusting the balance sheet to reflect the fair market value of individual assets and liabilities. It is often used for holding companies or firms without meaningful earnings.

A method that projects future cash flows and discounts each to present value using a rate reflecting time value and risk. It is the primary income approach method for businesses with forecastable cash flows.

A single-period income method that divides a normalized earnings measure by a capitalization rate. It assumes a stable, sustainable earnings stream growing at a constant rate.

The rate used to convert future cash flows into present value, reflecting the time value of money and the risk of the cash flows. It is often estimated with the build-up or modified capital asset pricing model.

A divisor or multiplier applied to a single period's sustainable earnings to estimate value. It equals the discount rate minus expected long-term growth, so higher growth produces a lower cap rate.

The blended required return on a company's debt and equity, weighted by their market value proportions. It is the typical discount rate for cash flows available to all capital providers.

A model that estimates the cost of equity as the risk-free rate plus beta times the equity risk premium. It is often adjusted with a size premium and company-specific risk premium.

A measure of how much a stock's returns move relative to the overall market. In valuation it gauges systematic risk and is often taken from comparable public companies and relevered for the subject's capital structure.

The estimated value of a business beyond the explicit forecast period, usually computed with a perpetuity growth formula or an exit multiple. It often dominates a discounted cash flow conclusion.

Adjusting reported earnings to remove nonrecurring items, owner-related compensation differences, and non-market transactions. The goal is to show the economic earnings a typical buyer would expect.

A small-business earnings measure that adds back owner compensation, related perks, interest, taxes, depreciation, and amortization. It represents the total benefit available to a single owner-operator.

Earnings before interest, taxes, depreciation, and amortization. It approximates operating cash flow before capital spending and is widely used as a pricing multiple in transaction comparisons.

A market approach method that applies pricing multiples from publicly traded companies similar to the subject. Multiples are adjusted for differences in growth, risk, and size.

A market approach method that derives multiples from actual sales of similar businesses or controlling interests. It is often preferred for control valuations because transaction prices include control premiums.

The additional amount a buyer pays for a controlling interest above the pro rata value of minority shares. It reflects the ability to direct operations, appoint management, and capture synergies.

A reduction applied to a controlling-interest value to estimate the value of a minority interest. It reflects the inability to direct management, set dividends, or force a sale.

A reduction reflecting the cost and delay of converting an ownership interest into cash. It is typically larger for minority interests in private companies with restricted transfer rights.

An empirical analysis comparing prices of unregistered restricted shares with freely traded shares of the same issuer. The average implied discount supports a lack-of-marketability adjustment.

The hierarchy describing whether a valuation reflects a controlling or minority interest and whether the interest is marketable. Analysts move between levels using control premiums and marketability discounts.

A hybrid technique that values tangible assets at fair return and capitalizes the remaining earnings as goodwill or intangible value. It is common in small business and intangible asset valuations.

The residual value of a business beyond the fair value of its identifiable net assets, arising from reputation, workforce, and customer relationships. It may be enterprise goodwill or personal to an owner.

Goodwill attributable to a specific individual's reputation, skill, or relationships rather than to the business itself. In divorce and litigation matters it is often excluded from the marital or business estate.

Goodwill that belongs to the business and would transfer to a buyer independent of any particular owner. It is distinct from personal goodwill and is generally included in a business valuation.

The additional value of an operating business beyond the sum of its individual assets, reflecting an assembled workforce and established operations. It assumes the business continues operating rather than being liquidated.

The amount realized if assets are sold individually, either in an orderly sale or a forced sale. It typically represents a floor value and assumes the business ceases operations.

An ownership stake of less than fifty percent that lacks the ability to control the entity. Its value is generally below a pro rata share of the whole because of limited influence.

The extra value created when two businesses combine, such as cost savings or cross-selling gains. Synergies are typically available only to a strategic buyer and are excluded from fair market value.

An analysis testing whether reported earnings are sustainable and backed by cash flow. It examines revenue recognition, accruals, related-party dealings, and one-time items.

The use of accounting, auditing, and investigative skills to examine financial records for legal proceedings. It covers fraud detection, damages quantification, and expert witness testimony.

A structured inquiry into financial records and transactions to determine whether fraud, misconduct, or misstatement occurred. Findings are documented to withstand scrutiny in legal proceedings.

A model describing three conditions that drive occupational fraud: pressure or incentive, opportunity, and rationalization. Auditors and investigators use it to assess where fraud risk is highest.

Advisory work provided to attorneys during a dispute, including damage calculations, valuation, and critique of opposing experts. The consultant assists counsel rather than testifying as an independent expert.

A person with specialized knowledge who may offer opinion testimony to help the court understand technical matters. The expert must be qualified, reliable, and independent of the retaining party's desired outcome.

A legal test for admitting expert testimony that examines whether the method is testable, peer reviewed, and generally accepted. Courts also assess error rates and whether the opinion fits the facts.

The monetary amount a party seeks to recover for a loss caused by another's conduct. Valuation experts measure lost profits, diminution in value, or other economic harm.

The net income a business would have earned but for the wrongful act. It is usually measured by comparing actual results with a but-for projection, net of avoided costs.

A reconstruction of what the financial position would have been absent the alleged wrongdoing. The difference between the but-for result and actual results forms the damage estimate.

The obligation of an injured party to take reasonable steps to limit its loss. Failure to mitigate can reduce recoverable damages in many jurisdictions.

Deliberate distortion of reported financial results through improper revenue recognition, expense deferral, or reserve adjustments. It is a common focus of forensic investigation and quality-of-earnings work.

The documented record of who handled evidence, when, and how it was secured. A clean chain supports admissibility and protects the credibility of forensic findings.