Market Value

Market Value

Market Value Jonathan Poland

The value of an asset or good in a competitive market, where buyers and sellers can freely participate, is known as its market value. This value is determined through fair and open competition. The following are illustrative examples.

Supply & Demand

Market value is driven by supply and demand. Increases in demand increase market value. Increases in supply decrease market value. For example, if home builders increase supply of new homes by 700% in an area this would drive prices down unless demand also increases.

Public Markets

A public market is a market that is open and accessible to the public such as a stock market. Prices on a liquid public market are considered a prime example of a market value. For example, a stock market with thousands of buyers and sellers of a stock competing at the same time to achieve the best price.

Perfect Information

Market value assumes that buyers and sellers are both in possession of the facts that are relevant to a transaction. For example, if insiders sell a stock because they know there is a problem at a company before investors, this may not be considered a market value for the stock.

Arms Length Transaction

Market value assumes that buyers and sellers have no relationship that could influence price. For example, if the CEO of a company buys assets from her company this would not be considered a market price unless the asset was put up for sale to the public with the CEO offering the highest price from multiple bidders.

Fair Market Price

Fair market price is a reasonable estimate of market price that is used for legal, accounting and tax purposes. For example, a CEO might buy an asset from a company at a fair market price based on independent and reputable assessments of a reasonable market value.

Reference Prices

Reference prices are data about recent prices that are used to estimate a fair market price. For example, data for home sales may be compiled to create reasonable estimates of the market price for homes based on market conditions, location, size, type, features and other factors.

Appraisal

An appraisal is a formal opinion of a fair market price formed by an expert in a particular market. This may make use of reference prices, models and other formal methods. Alternatively, it may be based on the expert judgement of an individual based on their experience.

Learn More
What is an Exit Interview? Jonathan Poland

What is an Exit Interview?

An exit interview is a formal meeting or conversation that takes place when an employee is leaving an organization, regardless…

Change Management Metrics Jonathan Poland

Change Management Metrics

Change management metrics are quantitative measures used to evaluate the effectiveness of change management practices within an organization. These measures…

Camping Strategy Jonathan Poland

Camping Strategy

Camping strategy is the practice of a using a geographical location as a competitive advantage. It has several common applications:…

The Importance of Lobbying 150 150 Jonathan Poland

The Importance of Lobbying

Lobbying is the act of influencing or attempting to influence the decisions of government officials, legislators, or regulators on behalf…

Product-as-a-Service Jonathan Poland

Product-as-a-Service

The Product-as-a-Service business model involves offering a service in areas that were traditionally sold as products. This model involves ongoing…

Performance Objectives Jonathan Poland

Performance Objectives

Performance objectives are goals that individuals set for themselves on a regular basis, such as quarterly, semi-annually, or annually. These…

Organic Growth Jonathan Poland

Organic Growth

Organic growth refers to an increase in revenue that is generated through a company’s own efforts, such as marketing, innovation,…

Capital Expenditures Jonathan Poland

Capital Expenditures

Capital expenditures, also known as capital expenses or capex, refer to the money that a company spends to acquire, maintain,…

Quality Metrics Jonathan Poland

Quality Metrics

Quality metrics are measurements that are used to evaluate the value and performance of products, services, and processes. These metrics…

Search →

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and people are the driving force regardless of where they fit in the value chain. People drive profit by bringing products and services to market. Profit drives progress by allowing for new ideas to form with the excess capital. That’s why you join Key Bridge.

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and people are the driving force regardless of where they fit in the value chain. People drive profit by bringing products and services to market. Profit drives progress by allowing for new ideas to form with the excess capital. That’s why you join Key Bridge.