Pre-Money vs Post-Money Valuation

Pre-money and post-money valuation are terms that are used to describe the value of company before and after a round of investment.

Pre-money valuation is the value of a company before it receives new cash in exchange for an equity stake. The post-money valuation will take into consideration the new cash and the impact of the amount of equity offered has had on the valuation of the company.

The post-money valuation is typically used as the ‘price’ element for valuation ratios such as price-to-earnings, price-to-book and price-to-sales.