What is baseline value? You have probably heard us at Value Scout mention baseline value many times. Here at Value Scout, we have two definitions for baseline value, depending on the context.
Baseline Value (V0)
In the context of baseline value (V0) mentioned in our framework - it is the initial and first concluded value of the company in the exit planning process. This term of baseline value is equal to the current market value at the beginning of the exit planning process. However, the company's baseline value will be the same year to year moving forward, while the current market value will change year to year as the company grows and financials change. To better understand how we conclude to this baseline value see this article: Understanding Current Market Value
Exit Modeler Baseline Value
In the context of baseline value in Exit Modeler - Baseline Value is the company's current market value forecasted throughout the remaining time to exit using the historical CAGR. In other words, baseline value measures what value will look like if the Company continues on its current growth trajectory. To learn more about Exit Modeler see these articles: Exit Modeler and How to Use Exit Modeler