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what is value - what people are willing to pay for (what the buyer pays) who said, "Value is what people are willing to pay for" - John Naisbitt 2 primary types of valuation - 1. relative valuation 2. intrinsic valuation relative valuation refers to what - methods that compare the price of a company to the market value of similar assets intrinsic value refers to what - the value of a company through fundamental analysis without reference to its market value but instead around its ability to generate cash flow in an M&A context, what is EV - transaction value in an M&A context, what is equity value - purchase price a company sold for $100M and the company being bought had $15M of debt and $2M of cash, what happens and what is the transaction value and purchase price - - the $2M would be used by shareholders of the acquired company to pay down existing $15M in debt to make $13M in debt now (15 - 2 = 13)- the proceeds from the deal would then be used to pay down the remaining debt (EV = CS + PS + Debt - Cash) - Result is 100 - 13 = 87