The meaning of “intrinsic value” in investing

Here are a few definitions of the term “intrinsic value” in investing.

investopedia describes it as:

The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Additionally, intrinsic value is primarily used in options pricing to indicate the amount an option is in the money.

This is a page from my book, “How I Sold My Business: A Personal Diary”

Friday, August 26, 2005

Jack and I met at lunch today, and he surprised me in two ways, none of them good.

First, he said he had no interest in buying my shares in the company, and wouldn't go along with any effort by David to pursue that. That wasn't a huge surprise; I'm not sure exactly why, but I didn't think he'd go for that approach anyway. However, his second surprise was more like a shock.

He said he wanted to make a counter-offer to me: He wanted to sell his interest in the company for some percentage over book value, not much he said, maybe twenty or thirty percent.

How much are you worth to your employer?

A long time ago -- 1991 to be exact -- a friend of mine named Joe was a contractor for the aerospace company I worked at. Just like a consultant, Joe was paid by the hour.

At some point Joe decided he was going to leave that company to take a permanent job elsewhere, as he had a medical problem and wanted to get better insurance. Upon telling my employer of his plans, the employer came back and said, “What if we make you a full-time employee here?”