Fair market value

A valuation standard based on a willing buyer and willing seller, both reasonably informed and neither compelled to transact. A particular multiple-based estimate does not by itself establish that standard.

Fair market value in round numbers

Hypothetical: annual earnings before interest, taxes, depreciation and amortization (EBITDA) of US$5.83m multiplied by an assumed 8x enterprise-value multiple implies US$46.64m, approximately US$46.6m. This is an enterprise-value indication under the assumption, not proven fair market value or equity value.

Scroll horizontally to read all columns.

Hypothetical multiple-based enterprise value; consistent currency and annual earnings
MeasureValue
Annual EBITDAUS$5.83m
Assumed EV / EBITDA multiple8x
Implied enterprise value5.83 × 8 = US$46.64m ≈ US$46.6m

Source: IRS Publication 561: fair market value standard.

Multiple · Liquidation value · Going concern · Related-party rent · All of the glossary