Fully Diluted Value (FDV)
Fully Diluted Value (FDV) is a term used to describe the total value of a company or investment that takes into account all potential investors. This includes not only those who currently hold shares in the company, but also any investors such as venture capitalists, private equity firms, or other stakeholders who may be eligible to purchase additional shares in the future. FDV is often seen as an important metric when valuing investments because it allows for more accurate assessments of how much capital can potentially be raised by a particular entity.
In order to calculate FDV, one must consider both existing and potential shareholders. Existing shareholders refer to those individuals who have already purchased some form of ownership stake in the company while potential shareholders are those that could potentially become owners if they were allowed to do so through exercising their options or warrants. The fully diluted value will then take into account both current and possible future ownership stakes held by each investor group when calculating its final result.
The calculation itself involves multiplying the number of issued common stock with its current market price (or fair market value). If there are any additional dilutive securities such as convertible notes, convertible preferred stock, warrants or options outstanding at this time then these will also need to be factored into the equation along with their respective conversion prices and exercise rights granted therein. In addition, any other forms of contractual obligations which might affect share count such as debt agreements would also need consideration when calculating FDV .
Once all these components have been accounted for and adjusted for inflation/deflation effects if necessary ,the final result should give us what is known as Fully Diluted Value (FDV). It’s important to note that this figure represents an estimation rather than an absolute guarantee since actual values may vary depending on multiple factors including economic conditions ,market sentiment etc..
Understanding fully diluted value can help investors make better decisions regarding which companies they choose to invest in since it provides them with more comprehensive information about how much capital can possibly be raised from various sources over time given certain assumptions about future performance and returns on investments made today . Furthermore ,it allows them compare different opportunities against each other using up-to-date figures instead relying solely on theoretical forecasts provided by experts without taking real world dynamics into account .
