// v4/lesson-1-02-page.jsx — Value vs price vs worth

function V4Lesson102() {
  const v4 = window.v4;
  const { V4DropCap, V4H2 } = window;
  return <V4LessonTemplate
    num="1.02"
    title={<>Value, price, and <span style={{ background: v4.yellow, padding: '0 10px', boxShadow: `4px 4px 0 ${v4.ink}` }}>worth</span>.</>}
    brief={<>Three different ideas that are routinely confused, with serious consequences for the work. The valuer&rsquo;s first discipline is knowing which one is being asked for — and which one they have just produced.</>}
    readMins={3}
    body={<>
      <V4DropCap letter="T">
        hree words. They are not interchangeable. Most of the disputes we mediate between a seller and a buyer, or a valuer and a credit committee, are at root a confusion of these three.
      </V4DropCap>

      <V4H2>1 · Price is what a transaction recorded</V4H2>
      <p>
        <strong style={{ color: v4.ink }}>Price</strong> is the easiest of the three to define and the hardest to interpret. It is a single observation — what one party paid to another, at a particular moment, under particular constraints, for a particular asset. The 2018 sale of a competitor business at 6.4× EBITDA is a price. It is data, not a model.
      </p>
      <p>
        Prices are accidents of negotiation. The same business sold to a strategic acquirer with a competitive process produces a different price than the same business sold to a passive buyer who arrived first. Both are prices. Neither is "value."
      </p>

      <V4H2>2 · Value is a structured estimate</V4H2>
      <p>
        <strong style={{ color: v4.ink }}>Value</strong>, in the valuer&rsquo;s sense, is a defensible estimate of what a price <em>would</em> be, under stated assumptions — typically the assumptions of a willing buyer and a willing seller, both informed, neither under compulsion, transacting at arm&rsquo;s length. It is the answer to a hypothetical question, defended on a page.
      </p>
      <p>
        Note the assumptions are not always those of arm&rsquo;s-length sale. Value-for-lending uses different assumptions; value-for-matrimonial-split uses different assumptions again. The standard of value is part of the question, not part of the answer. Chapter VI takes this up in earnest.
      </p>

      <V4H2>3 · Worth is what something does for a specific party</V4H2>
      <p>
        <strong style={{ color: v4.ink }}>Worth</strong> is the most slippery of the three, and the one most often confused with value. Worth is investment value — what the business does for a specific buyer, accounting for their synergies, their cost of capital, their alternative uses of the same dollar.
      </p>
      <p>
        A book of recurring revenue is worth more to a competitor that can fold the customer service function into existing infrastructure than it is to a private equity buyer that will need to keep that function intact. Both buyers know the value of the business; their worth-of-the-business numbers differ.
      </p>
    </>}
    pullQuote={<>The seller asks: what is my business <em style={{ fontStyle: 'italic' }}>worth</em>? The buyer asks: what is its <em style={{ fontStyle: 'italic' }}>value</em>? The market produces a <em style={{ fontStyle: 'italic' }}>price</em>. None of the three is interchangeable, and confusing them is how negotiations break down.</>}
    takeaway={<>Price is data. Value is an estimate, defended under stated assumptions. Worth is what something does for a specific party. Naming the three correctly, on the page, is the first discipline.</>}
    prevHref="lesson-1-01.html" prevNum="1.01" prevTitle="Why this is not a math problem"
    nextHref="lesson-1-03.html" nextNum="1.03" nextTitle="Why listed-company methods miss SMEs"
  />;
}
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