Question

what is value gap

Answer 1

A value gap or a valuation gap is the difference in the real market value of a company and the value that the promoter of the company expects to sell it for to achieve his or her needs. A value gap may arise if the buyer's valuation doesn't agree with the seller's valuation, based on different assumptions and methods used to evaluate the same company. A valuation gap arises when a business owner wants to sell his company for more money than the buyer is willing to pay.

If the market is in favor of the buyer, then he will want to pay a low amount than the company owner wants. And, if it's a seller's market then the company owner will be asking for a much higher figure than most buyers are offering and the difference causes the value gap.