Where does each definition come from?
Fair market value comes from regulation, and the same wording is carried through the authorities that use it; fair value comes from whichever legislature, court or contract attached the label to a definition supplied separately, and the content of that definition changes from one statute and one proceeding to the next. The federal estate tax regulation states the first: fair market value is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts,” and the same paragraph adds that fair market value “is not to be determined by a forced sale price” (Treas. Reg. §20.2031-1(b)). The gift tax regulation carries the same construct in its own words (Treas. Reg. §25.2512-1), and Rev. Rul. 59-60 §2.02 reads the two together, saying they define fair market value “in effect” as the same thing. It describes a transaction between hypothetical parties that is not occurring.
Fair value has no comparable single text. The International Valuation Glossary — Business Valuation, updated 24 February 2022 and published jointly by the American Society of Appraisers, CBV Institute, RICS and TAQEEM, defines fair value as “a Standard of Value for which there are different definitions, depending on the context and purpose,” and adds that fair value “is typically defined or imposed by a third party (e.g., by law, regulation, contract, or financial reporting standard-setting bodies).” The glossary then concedes its own authority on the point. It describes itself as “neither authoritative nor prescriptive,” and its scope note provides that where a term “conflicts with a published governmental, judicial, or accounting authority, precedence should be given to the use and interpretation of terms as they appear in applicable published authoritative guidance, given the purpose of the valuation.”
The working difference is that fair market value posits a sale that is not happening, while fair value in most dispute settings posits no sale at all. Courts read the choice of words as deliberate. In Bohac v. Benes Service Co., 310 Neb. 722, 969 N.W.2d 103 (2022), the Nebraska Supreme Court said its conclusion that fair value is calculated without discounting for lack of marketability or minority status was “informed by the use of the word ‘fair value’ in contrast to another term that appears frequently in Nebraska statute—‘fair market value,’” and found, with other courts and commentators, that “the use of the term ‘fair value’ instead of ‘fair market value’ in this context suggests ‘disapproval of a fair market value approach and the discounting that would accompany it.’” Two words in a statute, and the framework changes.
Who decides whether fair value or fair market value applies to a case?
Not the appraiser. In a dispute the definition of value is fixed before the analysis begins — by the governing statute or regulation, by the cause of action pleaded, by any controlling agreement and by the law of the forum — and what the chosen term means is decided as a question of law. The Colorado Supreme Court put it directly in Pueblo Bancorporation v. Lindoe, Inc., 63 P.3d 353 (Colo. 2003): “We conclude that the meaning of ‘fair value’ is a question of law, not a question of fact to be opined on by appraisers and decided by the trial court.” The same passage supplies the review standard that follows from it: “The interpretation of statutory language is a question of law which we consider de novo.”
What happens after the definition is fixed is treated very differently, and the two layers should not be run together. The meaning of the standard is briefable and appealable and is settled before an appraiser opens a spreadsheet. The number reached under that standard is a finding: earlier in the same litigation, the Colorado Court of Appeals held that “[a] fair value determination is a factual one, and therefore, the trial court’s valuation will not be disturbed unless clearly erroneous” (Pueblo Bancorporation v. Lindoe, Inc., 37 P.3d 492 (Colo. App. 2001)). Federal transfer tax sorts the layers the same way from the other direction: Rev. Rul. 59-60 §3.01 states that “[a] determination of fair market value, being a question of fact, will depend upon the circumstances in each case.” Two levers, two standards of review, and the first is not the expert’s to pull. How deferential the second review is depends on the forum, so check it there rather than assuming Colorado’s formulation travels.
The valuation profession writes the same allocation into its own reporting rules. ASA Business Valuation Standards BVS-VIII, which “must be followed only in the preparation of comprehensive written business valuation reports” by members of the American Society of Appraisers, lists at §IV the components of the valuation assignment that must appear in the report. Section IV.B requires that “the purpose and use of the valuation must be clearly stated,” and that “[i]f a valuation is being performed pursuant to a particular statute, the statute must be referenced.” Section IV.C requires that “the standard of value used in the valuation must be stated and defined.” Sections IV.D and IV.E require the premise of value and the level of value to be defined, and §IV.F requires the effective date and the report date to be stated. The report names the standard and points at the statute; it chooses neither. One caveat belongs alongside any citation to these standards: they bind members of the American Society of Appraisers as a matter of membership, and the General Preamble to the ASA Business Valuation Standards provides that deviations “are not intended to form the basis of any civil liability and should not create any presumption or evidence that a legal duty has been breached.”
Sometimes the law chooses explicitly and sometimes it is silent, and Virginia demonstrates both inside one state. Virginia’s corporate statute defines fair value exhaustively for appraisal: the value of the corporation’s shares determined “[i]mmediately before the effectiveness of the corporate action to which the shareholder objects,” “[u]sing customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal,” and “[w]ithout discounting for lack of marketability or minority status,” subject to an exception for certain amendments to the articles of incorporation (Va. Code §13.1-729). Virginia’s equitable distribution statute, Va. Code §20-107.3, names no standard of value at all; it fixes the date — “the value of any such property as of the date of the evidentiary hearing on the evaluation issue” — and leaves the definition unstated. In the first proceeding the definition is handed to the appraiser. In the second, the absence of one is the thing to be argued.
Does fair value mean there are no discounts?
No. The claim that fair value means no discounts collapses three separate questions into one. A standard of value is a definition of the value being measured. A discount for lack of marketability or for lack of control is an adjustment on a different axis, the level of value: ASA Business Valuation Standards BVS-VIII treats the two as separate components of the assignment that must each appear in a comprehensive report, the standard of value at §IV.C and the level of value at §IV.E. Whether a particular jurisdiction’s fair value standard permits a particular level-of-value adjustment is a third question, and it is answered by that jurisdiction’s statute and decisions rather than by the label on the standard.
ASA Business Valuation Standards BVS-VII, which “must be followed in all valuations” by members of the American Society of Appraisers, makes the dependency explicit at §II.A: “A discount has no meaning until the conceptual basis underlying the base value to which it is applied is defined.” Section III.A adds that “[t]he purpose, applicable standard of value, or other circumstances of an appraisal may indicate the need to account for differences between the base value and the value of the subject interest,” and §III.B that “[t]he base value to which the discount or premium is applied must be specified and defined.” The standard supplies the base value; the discount is an adjustment made to that base; neither collapses into the other.
Where a legislature has answered the question, it usually answers on the face of the text. Virginia’s appraisal definition sets fair value “[w]ithout discounting for lack of marketability or minority status except, if appropriate, for amendments to the articles of incorporation pursuant to subdivision A 5 of § 13.1-730” (Va. Code §13.1-729) — the bar and its exception in a single clause. In Delaware, where the appraisal statute names fair value and defines nothing further (8 Del. C. §262(h)), the rule is judicial. In Cavalier Oil Corp. v. Harnett, 564 A.2d 1137 (Del. 1989), the Delaware Supreme Court held that once the company as an entity has been valued, in determining the dissenting shareholder’s proportionate interest “the Court of Chancery is not required to apply further weighting factors at the shareholder level, such as discounts to minority shares for asserted lack of marketability,” because “to fail to accord to a minority shareholder the full proportionate value of his shares imposes a penalty for lack of control, and unfairly enriches the majority shareholders who may reap a windfall from the appraisal process by cashing out a dissenting shareholder.”
Other jurisdictions split the question rather than answering it once, which is why the blanket statement fails. In New York, Friedman v. Beway Realty Corp., 87 N.Y.2d 161, 661 N.E.2d 972 (1995) — a dissenters’ appraisal under Business Corporation Law §623, in which the Court of Appeals held there is “no difference in analysis” between §623 and the §1118 oppression buy-out — held that no minority discount applies, because imposing one “would result in minority shares being valued below that of majority shares, thus violating our mandate of equal treatment of all shares of the same class in minority stockholder buyouts.” New York nonetheless permits a discount for lack of marketability, and Friedman itself remitted the matter “for a new determination of the appropriate discount for unmarketability of petitioners’ shares and a recalculation of fair value.” Ohio never adopted the term at all: its dissenters’ statute entitles the shareholder to “fair cash value,” defined as “the amount that a willing seller who is under no compulsion to sell would be willing to accept and that a willing buyer who is under no compulsion to purchase would be willing to pay” — the willing-buyer, willing-seller construct under a different name — and yet, in the version effective 4 May 2012 (H.B. 48, 129th General Assembly), the same subsection directs that in computing fair cash value “[a]ny premium associated with control of the corporation, or any discount for lack of marketability or minority status” be excluded (Ohio Rev. Code §1701.85(C)(1), (C)(1)(b)). Ohio kept its own vocabulary and abandoned the result that vocabulary had been thought to compel.
Each statute and decision cited on this page was read in a primary source on 10 September 2026, and each states the rule of one named jurisdiction only; verify the controlling authority in the forum before relying on any of it. This Institute publishes no discount figure — no percentage, range or average offered as typical, market or reasonable — and no table of discounts courts have accepted. What the adjustment is, who may argue for it, and what the empirical bases for it are actually worth is covered separately at Discounts & Premiums.
Is fair value always higher than fair market value?
No. Delaware appraisal is the standing counterexample, because fair value there is capable of landing below the price a real buyer actually paid. Section 262(h) of the Delaware General Corporation Law directs that “the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger, consolidation, conversion, transfer, domestication or continuance,” adding only that “[i]n determining such fair value, the Court shall take into account all relevant factors.” The exclusion is of value created by the transaction, and it pushes the answer toward the company as it stood on its own.
Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d 128 (Del. 2019), shows what that exclusion does to a number. The Delaware Supreme Court reversed the Court of Chancery and directed that on remand it “shall enter a final judgment for the petitioners awarding them $19.10 per share, which reflects the deal price minus the portion of synergies left with the seller as estimated by the respondent in this case, Aruba.” The Aruba board had decided to accept an offer of $24.67 per share, and the merger was announced at that price. The statutory standard produced a figure materially below what a willing buyer had agreed to pay for the whole company, which is the opposite of what the folk rule predicts.
The direction reverses because the two families of statute exclude different things. A Model Business Corporation Act-derived definition excludes an adjustment made at the shareholder level, “without discounting for lack of marketability or minority status” (Va. Code §13.1-729), which pushes the number up toward a pro rata slice of the whole enterprise. Delaware General Corporation Law §262(h) excludes value arising from the transaction itself, which pushes the number down toward a standalone going concern. Fair value is not a direction. It is a definition, and each definition’s exclusions run whichever way the enacting purpose requires.
Contested appraisal of a public company is a different regime, and this Institute does not cover it. Delaware’s own statute supplies the dividing line: §262(g) directs the Court of Chancery to dismiss the proceeding as to holders of shares that were listed on a national securities exchange immediately before the transaction, unless the shares entitled to appraisal exceed 1% of the class eligible for appraisal, or the value of the consideration provided for them exceeds $1 million, or the merger was approved under §253 or §267. The litigation in the matters that clear that filter — over the weight given to deal price, to unaffected trading price and to deal price less synergies — is covered by our Economic Damages Institute. Fair value in closely held companies is covered here, at Appraisal & Dissenters’ Rights.
Is intrinsic value a standard of value?
No. Neither the profession’s current glossary nor the American Society of Appraisers’ own standards treat intrinsic value as a standard of value, which means the widely repeated line that there are four standards of value — fair market value, fair value, investment value and intrinsic value — is wrong twice over: it admits one term that is not a standard and omits one that is.
The International Valuation Glossary — Business Valuation (updated 24 February 2022) defines Standard of Value as “the definition of value used in a valuation (e.g., Fair Market Value, Market Value, Fair Value, or Investment Value).” Its entries for Fair Market Value, Market Value, Fair Value and Investment Value each open with the words “a Standard of Value.” Its entry for Intrinsic Value does not, and reads instead: “the value that an investor considers, on the basis of available facts, to be the ‘true,’ ‘real,’ or fundamental value that will become the Market Value when other investors reach the same conclusion.” ASA Business Valuation Standards BVS-I, §II.B.9, illustrates the standard of value applicable to a valuation with “fair market value, fair value, investment value, or other,” and likewise omits intrinsic value. Market Value, which the four-standards list leaves out, carries the label that list hands to intrinsic value.
The distinction is not academic, because intrinsic value is an analyst’s conclusion about what something is truly worth rather than a definition a tribunal imposes on the parties. No statute directs a court to determine intrinsic value, no cause of action pleads it, and an expert who names it as the standard of value in a dispute has answered a question the governing law had already answered differently.
One trap produces most of the confusion, and it is Delaware’s. Explaining the concept of value contemplated by the appraisal statute, the Delaware Supreme Court in Tri-Continental Corp. v. Battye, 74 A.2d 71 (Del. 1950), said “that the stockholder is entitled to be paid for that which has been taken from him, viz., his proportionate interest in a going concern,” and that “[b]y value of the stockholder’s proportionate interest in the corporate enterprise is meant the true or intrinsic value of his stock which has been taken by the merger” (quoted in Paskill Corp. v. Alcoma Corp., 747 A.2d 549 (Del. 2000)). That is 1950 vocabulary describing the content of the fair value standard. It is not a separate standard a litigant can elect.
How much can the choice between fair value and fair market value change the number?
Enough that it can be the largest single question in the case. In Pueblo Bancorporation v. Lindoe, Inc., 63 P.3d 353 (Colo. 2003), the parties did not disagree about the value of the corporation; the only issue was whether a discount could be applied to the dissenter’s shares. The trial court found an enterprise value of $666.16 per share, applied a minority discount and a marketability discount, and fixed fair value at $362.03 per share. The Colorado Supreme Court held that a marketability discount may not be applied at the shareholder level, reasoning that “if the General Assembly intended a dissenter to receive the fair market value for his shares, it would have said so.” Certiorari had been granted only on the marketability discount, and the court expressly declined to decide “whether there may be an equitable exception to this rule.” Colorado has since replaced the statute Pueblo construed: article 113 was repealed and reenacted in 2020 (SB 19-086), and C.R.S. §7-113-101(3)(c) now defines fair value “[w]ithout discounting for lack of marketability or minority status,” subject to an articles-amendment exception — the legislature arriving where the court had.
Bohac v. Benes Service Co., 310 Neb. 722, 969 N.W.2d 103 (2022), produced the same structure in a buyout rather than an appraisal. The district court fixed the fair value of the estate’s 14.84 percent interest in Benes Service Co. at $2,886,790 as of the day before the dissolution petition was filed. The Nebraska Supreme Court concluded that the district court “erred in its determination of the fair value of BSC, both because it did not use the correct definition and because it subjected the Estate’s shares to discounts,” vacated the award and remanded for recalculation. The court also set out the order of operations plainly, describing “a multistep analysis” that runs from the definition of fair value, to whether that definition includes or excludes discounts, to the premise of value, and only then to methodology.
None of those figures is a benchmark, and this Institute does not publish one. A discount a court accepted or rejected on a particular record is a litigation outcome under a particular statute, not a valuation input that transfers to the next matter. What the two decisions establish is narrower and more useful: in each, the movement in the number came from construing a statutory phrase rather than from modeling, and the argument that produced it was available to either party before an appraiser was engaged. The valuation date is the second assumption the law fixes the same way, and it is covered at The Valuation Date & Premise of Value.
The mirror image sits in the transfer tax, which is why the same block of shares can carry opposite instructions depending on the proceeding. In a statutory appraisal or an oppression buyout the definition strips shareholder-level discounts out. On a gift of an identical block, Rev. Rul. 93-12, 1993-1 C.B. 202, holds that where a donor transfers shares in a corporation to each of the donor’s children “the factor of corporate control in the family is not considered in valuing each transferred interest,” and that a minority discount “will not be disallowed solely because a transferred interest, when aggregated with interests held by family members, would be a part of a controlling interest.” Same shares, same family, opposite instruction, because the governing law is different: see Estate & Gift Valuation. Nothing on this page states which standard governs any particular matter, or what any interest is worth. That is counsel’s question and then the appraiser’s.