What is a standard of value?
A standard of value is the definition of value that governs a particular engagement, and in a dispute it is supplied to the parties rather than chosen by them. The International Valuation Glossary — Business Valuation (updated 24 February 2022) puts it plainly: Standard of Value is “the definition of value used in a valuation (e.g., Fair Market Value, Market Value, Fair Value, or Investment Value),” and “[t]he Standard of Value affects the methods, inputs, and assumptions used by the business valuation professional.” Its entry for Fair Value adds where the content comes from: “Fair Value is typically defined or imposed by a third party (e.g., by law, regulation, contract, or financial reporting standard-setting bodies).”
Because the definition is imposed, what it means is argued as law. The Colorado Supreme Court held in Pueblo Bancorporation v. Lindoe, Inc., 63 P.3d 353 (Colo. 2003), 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,” and that “[t]he interpretation of statutory language is a question of law which we consider de novo.” The number produced under the chosen definition is the second layer and is a finding of fact. A term that no statute imposes and no contract adopts has no place on the first layer, because there is nothing for a court to construe.
The reporting rules treat the standard as a separate, stated element of the assignment. The American Society of Appraisers’ Business Valuation Standards BVS-VIII §IV.B requires that “[t]he 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”; §IV.C requires that “[t]he standard of value used in the valuation must be stated and defined.” The American Institute of Certified Public Accountants’ Statement on Standards for Valuation Services No. 1 (June 2007), now carried in AICPA Professional Standards as VS Section 100, lists at paragraph .12 the matters the valuation analyst should consider, at a minimum, in judging whether the engagement can be completed with professional competence, among them the “[a]pplicable standard of value (for example, fair value or fair market value) and the applicable premise of value.” The report names the standard and points at the statute; it does not select one.
Why isn’t intrinsic value one of the standards of value?
Because the authorities that catalog standards of value do not label it one, and because nothing imposes it. The International Valuation Glossary — Business Valuation (updated 24 February 2022) gives Fair Market Value, Market Value, Fair Value and Investment Value entries that each begin, immediately after the term, with the words “a Standard of Value,” and gives Intrinsic Value an entry that does not: “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.” The reason is inside the definition: intrinsic value is what an investor concludes, pending confirmation by a market. It is a view about the world, not a rule the parties have been handed.
The American Society of Appraisers is more categorical. Its Business Valuation Standards, containing all standards approved through February 2022, illustrate the standard of value with closed-ended phrasing — BVS-I §II.B.9 requires identification of “[t]he standard of value applicable to the valuation (e.g., fair market value, fair value, investment value, or other)” — and the word intrinsic appears nowhere in the document, in any context. The older International Glossary of Business Valuation Terms, adopted 8 June 2001 by the American Institute of Certified Public Accountants, the American Society of Appraisers, the Canadian Institute of Chartered Business Valuators, the National Association of Certified Valuation Analysts and The Institute of Business Appraisers, does define Intrinsic Value, but its entry for Standard of Value gives the same three examples and leaves it out: “the identification of the type of value being utilized in a specific engagement; e.g. fair market value, fair value, investment value.”
So the familiar list of four standards is wrong in both directions. It admits intrinsic value, which no cataloging authority labels a standard, and it drops Market Value, which the 2022 glossary does label one. One further caution belongs with any citation to these documents: the 2022 glossary describes itself as “neither authoritative nor prescriptive,” and 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.” The glossary is evidence of professional usage. The statute is the thing that binds.
What does intrinsic value actually mean in finance and securities analysis?
It means an estimate of what a security is really worth, against which the traded price can be judged — an analyst’s conclusion, not a legal definition. The 2022 International Valuation Glossary captures that in the phrase “the ‘true,’ ‘real,’ or fundamental value that will become the Market Value when other investors reach the same conclusion.” The claim belongs to whoever makes it: two competent analysts looking at the same company can hold different intrinsic values without either being wrong about any definition.
The word also carries a second, narrow and entirely different technical meaning, which is why it causes so much trouble in cross-examination. Both glossaries attach it to options. The International Valuation Glossary — Business Valuation (updated 24 February 2022) says that “[w]hen the term applies to options, Intrinsic Value is the difference between the exercise (strike) price of an option and the market price of the underlying security”; the International Glossary of Business Valuation Terms (8 June 2001) says that “[w]hen the term applies to options, it is the difference between the exercise price or strike price of an option and the market value of the underlying security.” That figure is arithmetic on two observable numbers, and has nothing in common with the first sense beyond the word; a report using the term without saying which sense is meant has created an ambiguity opposing counsel will find.
Courts use the related word “fundamental value” in the first sense and are careful to mark it as the analyst’s concept rather than the statute’s. In Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d 128 (Del. 2019), the Delaware Supreme Court wrote that Dell and DFC “did not imply that the market price of a stock was necessarily the best estimate of the stock’s so-called fundamental value at any particular time,” and distinguished informational efficiency from the proposition “that an informationally efficient market price invariably reflects the company’s fair value in an appraisal or fundamental value in economic terms.” Fair value is what the statute directs the court to find. Fundamental value is what the finance literature is talking about. The court kept them apart in a single sentence.
Where have courts used the phrase “intrinsic value,” and what did they mean by it?
They have used it, and in each instance the content came from that court’s own law rather than from finance. Delaware supplies the most-quoted example. In Tri-Continental Corp. v. Battye, 31 Del. Ch. 523, 74 A.2d 71 (Del. 8 June 1950), the Supreme Court of Delaware stated the appraisal concept of value in its own voice: “The basic concept of value under the appraisal statute is that the stockholder is entitled to be paid for that which has been taken from him, viz., his proportionate interest in a going concern. By 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.” It continued that “[i]n determining what figure represents this true or intrinsic value, the appraiser and the courts must take into consideration all factors and elements which reasonably might enter into the fixing of value,” and that “since intrinsic or true value is to be ascertained, the problem will not be settled by the acceptance as the sole measure of only one element entering into value.” That is 1950 vocabulary for the content of the fair value standard, and the Delaware courts have carried the going-concern half of it forward since. It is not a standard a litigant may elect.
Virginia went further, and the exception is worth knowing precisely because it is one. In Howell v. Howell, 31 Va. App. 332, 523 S.E.2d 514 (Va. Ct. App. 27 Jan. 2000), the Court of Appeals of Virginia wrote that “[t]he purpose for which it is being valued determines which definition, which standard of value, is proper,” and that Bosserman v. Bosserman, 9 Va. App. 1, 384 S.E.2d 104 (1989), “defined ‘value’ for equitable distribution purposes; it set intrinsic value as the standard of value.” Bosserman itself had held that “[t]rial courts valuing marital property for the purpose of making a monetary award must determine from the evidence that value which represents the property’s intrinsic worth to the parties upon dissolution of the marriage.” Howell then defined the term in Virginia’s own way: “Intrinsic value is a very subjective concept that looks to the worth of the property to the parties.”
Notice what that does and does not establish. In Virginia equitable distribution the phrase is imposed by the forum’s case law, so it functions there exactly as a standard of value functions: it is a definition the parties did not pick, and its meaning is argued from Virginia decisions rather than from a finance text. But its content — worth to these two spouses, in a marriage being dissolved, with no sale contemplated — is not the glossary’s intrinsic value, and the rule is Virginia’s alone. The marital property questions the term sits inside are covered at Marital dissolution and, for the goodwill fight in particular, at Is business goodwill marital property?
Why does calling intrinsic value a standard produce briefs that argue past each other?
Because the two sides end up answering different questions while believing they disagree about one. A standard of value fixes what is being measured before the evidence is gathered; when one expert names intrinsic value as the standard, that expert has answered a question the governing law had already answered, usually differently, and every downstream choice inherits the error. The opposing expert, working under the statutory definition, produces a number that is not comparable, and the briefs collide over modeling inputs when the real disagreement is legal and could have been decided first.
The order of operations is the cure. The definition comes first, what that definition includes or excludes comes second, and method comes last; the American Society of Appraisers’ Business Valuation Standards impose that sequence on the report by requiring the standard of value, the premise or basis of value and the level of value to be stated and defined as separate items (BVS-VIII §§IV.C, IV.D, IV.E). Two of the three most-repeated errors in this field come from collapsing those axes, the other being the belief that a standard of value can itself decide whether a discount applies — taken up at Is there a standard discount for lack of marketability?
The practical test is short. Ask what document imposes the definition being proposed: a statute, a regulation, a controlling agreement, or the case law of the forum. If the answer is a textbook, it is not a standard of value in that proceeding, whatever it is called. Every authority named on this page was read in a primary source on 15 September 2026, and each court decision cited states the law of the one jurisdiction named. Nothing here says which standard governs a particular matter; that is counsel’s question and then the retained expert’s. See Fair value and fair market value and What is the difference between fair value and fair market value?