The Three Lenses of Value are iBD’s way of separating what the business is worth to you as an investment, what a buyer might pay for it and what a sale would actually provide to you. The same company can have different values because each lens answers a different question.
Owner’s Value: what is holding this investment worth to me?
Owner’s Value uses discounted cash flow to translate expected future cash into a value at a stated date. The required return reflects the risk and the kind of cash flow being valued. The rate is an input to the valuation; it is not the value itself.
The current case model discounts discretionary owner distributions and ending market equity using a cost-of-equity assumption. A method that values cash to all capital providers uses a different basis, commonly WACC, before bridging to equity. Match the cash flow, rate and claims so debt or cash is not counted twice.
Owner’s Value teaches this investment view. Its assumptions require judgment; a calculation does not guarantee the forecast payments.
Market Value: what might an informed buyer pay?
Market Value estimates the value of the company or ownership interest on a stated market basis. An earnings-multiple approach applies a supported multiple to defined Normalized EBITDA, then accounts for debt, cash and other adjustments to reach equity.
The multiple depends on relevant market evidence, risk, growth and transaction context. The supplied model includes a classroom cost-of-capital approximation. It is not an observed market quote or a universal conversion from WACC to an EBITDA multiple. Improving a Roadmap score does not automatically earn a buyer’s higher price.
Market Value develops the earnings and pricing assumptions. Enterprise and equity value explain the bridge from the operating business to the owners’ interest.
Transaction Value: what would the sale provide, and when?
Transaction Value applies stated deal terms to your ownership interest: closing payments, later consideration, taxes, fees and other claims. Show net closing cash separately from seller notes, earnouts, rollover equity and other future amounts.
The amount at risk, payment timing and conditions matter alongside the headline price. The case model’s percentages are teaching assumptions, not the tax result or terms of an actual client sale.
Transaction Value connects those terms to your choice to keep, scale, step back or sell.
Compare the decision on a consistent basis
State the valuation date, ownership interest, scenario and tax basis before comparing the lenses with the Scorecard. Present value today, projected equity in five years and after-tax cash at closing are different measures. Their disagreement may reveal a real trade-off; do not force them to match.
Put the idea to work
Explore Module 2 to connect this idea to the work, evidence and tools. Browse all concepts or see the complete system.