When farmland changes hands, the conversation often focuses on price per acre (titled or cultivated), price per quarter, or an assessment multiplier. All three typically refer to farmland value. (Where assessments include both land and improvements, the two are often separated to keep comparisons consistent.)

But in many real-world farm transactions—especially larger, multi-parcel, or operating farm sales—enterprise value may also come into play.

Understanding the distinction between these concepts is essential for setting expectations, pricing assets correctly, and avoiding unnecessary friction during a sale.

What is Farmland Value?

Farmland value refers strictly to the value of the land itself, independent of how it is farmed or who owns or operates it.

This is how most bare land transactions are evaluated and compared.

Farmland value is typically influenced by:

• Soil quality and productivity
• Cultivated versus pasture acres
• Parcel size, shape, and contiguity
• Location and proximity to other farmland
• Road access, drainage, and topography
• Irrigation potential or water rights (where applicable)
• Local market demand and recent comparable sales

Put simply, farmland value answers the question:
“What is this land worth on its own, in today’s open market?”

What is Enterprise Value?

Enterprise value looks beyond the land and considers the value of a functioning farming operation.

Rather than isolating the land, this approach views the farm as a going concern.

Enterprise value may reflect:

• Farmland
• Yard sites and buildings
• Grain handling or livestock infrastructure
• Equipment and inventory
• Established systems and labour
• The ability to generate cash flow as an operating unit

Enterprise value becomes relevant when:

• A whole farm operation is being sold
• Land is transferred together with operating assets and systems
• The transaction resembles a business transition rather than a land-only purchase

Here, the key question shifts to:
“What is this operation worth as a working farm?”

Importantly, unlike farmland value—which is largely set by the market—enterprise value is often buyer-specific. What one buyer can justify may not translate to the next, particularly when value depends on scale, systems, or how easily the operation can be absorbed into an existing business.

Financing further reinforces this distinction: land is generally straightforward to finance, while improvements, equipment, and operating businesses are underwritten more conservatively, often limiting how much of an enterprise premium a buyer can actually pay.

A Note on “Enterprise Value” Terminology

In corporate finance and accounting, enterprise value refers to the value of a business independent of its capital structure. Outstanding debt is included, while cash or cash equivalents are excluded.

In farmland and farm transactions, the term is used more practically than technically. It generally describes the value of a going concern, meaning land plus operating assets, rather than a strict accounting calculation. Land is typically valued and underwritten on an unlevered basis, even when it is part of a broader operation.

Where Share Sales Fit In

Share sales are becoming more common in agricultural transactions, particularly for larger or more complex operations.

In a share sale, the buyer purchases the shares of the operating company rather than buying land and assets individually. While the structure may differ, the underlying valuation questions remain the same.

Share sales tend to align more closely with enterprise value, because:

• The buyer may be acquiring a going concern, though land-only share sales are also common
• Operations may continue without interruption
• Assets and liabilities remain inside the company

Even so, most buyers still:

• Internally value the farmland separately
• Assess buildings and equipment conservatively
• Discount performance that depends on the current owner’s management

In practice, a share sale affects transaction structure and execution, but does not change how the land itself is valued—though structure and tax considerations can influence negotiated outcomes.

Why The Difference Matters

Confusing farmland value with enterprise value is a common (and potentially costly) mistake in farm transactions.

Often, transactions don’t stall because of disagreement on price, but because value is being framed differently by each party. One side may be focused on the underlying land value, while the other is assessing the farming operation as a whole. Without alignment, discussions can quickly lose momentum.

These issues aren’t about anyone being wrong. They reflect how sellers and buyers naturally look at risk and value differently, especially when land value and operating performance get blended together.

For sellers:

• Strong farm performance can lead to higher expectations for what the land should be worth
• Improvements or efficiency gains may not work the same way for the next owner
• Buyers may push back on prices that don’t line up with recent land sales

For buyers:

• Paying a price that assumes business-level performance for land alone can hurt long-term returns
• Cash flow can change once ownership and management change
• Buildings and equipment depreciate faster than land

Keeping a clear distinction between land value and enterprise value helps negotiations stay grounded and productive.

Implications For Selling Strategy

Using the wrong valuation lens can:

• Narrow the buyer pool
• Extend time on market
• Create friction during negotiations
• Ultimately reduce realized sale prices

A well-structured sale often:

• Separates land value from operating assets
• Allows multiple buyer types to engage
• Preserves flexibility rather than forcing a single outcome

In practice, achieving the best outcome depends less on a single valuation method and more on taking a strategic, outcomes-driven approach—one that considers objectives, structure, timing, and buyer fit before determining how value should be positioned and pursued.

Final Thoughts

Farmland value tells you what the acres are worth. Enterprise value tells you what the farm—or the farming entity—is worth to the right buyer.

As more land changes hands through corporate structures and share sales, understanding this distinction is becoming increasingly important. Just as importantly, outcomes are shaped by knowing when farmland value is the appropriate lens—and when an enterprise perspective is required.

At Hammond Realty, we determine and apply this distinction through our Ag Exits & Acquisitions Advisory Framework™, helping clients approach farmland transactions deliberately—by clarifying objectives first, then aligning valuation, structure, and execution to the intended outcome.

Whether you’re considering a sale, an expansion, or simply thinking ahead, a strategic conversation early in the process can materially change the result.

Written by Bobby Montreuil, B. Comm
Ag Expert, Hammond Realty
Bobby specializes in Saskatchewan farmland sales and advisory, working with farm families, operators, and investors on land valuation, acquisitions, and transition strategy. Combining formal business training with hands-on farming experience, he focuses on aligning valuation, structure, and execution to achieve clear client outcomes.

Questions? Contact Bobby