Glossary
With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.
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Capitalization Rate
« Back to Glossary IndexCategory: Business Valuation
In the context of business valuation, the capitalization rate is a key metric used to estimate the value of a business. The capitalization rate, often referred to as the “cap rate,” reflects the relationship between the expected return on investment and the anticipated earnings of the business. It can also be described as a divisor (usually expressed as a percentage) used to convert anticipated economic benefits of a single period into a value.
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