Book value is a company's net worth divided by its number of shares — that is, total assets minus total liabilities, per share. It reflects what shareholders would theoretically be left with if the company were wound up and its balance sheet realised at stated values.
Why it matters to you
Book value gives you a grounded floor when judging an unlisted share's price. A share trading at many times its book value is pricing in heavy future growth; one near book value may be cheap — or may signal a troubled balance sheet. Comparing the unlisted price to book value is a quick sanity check against hype.
Example: An unlisted bank's shares traded close to book value, while a fast-growing SaaS firm traded at 15x book — reflecting very different growth expectations. Compare book value vs unlisted share price.