Appraisal Method - Asset Based
15 Feb 2017 10:13 AMTroy Potter
Asset Based
In businesses where there is history of low earnings or perhaps
even losses, the Asset Based approach is generally used. Using
this method, the value of the collective assets (both tangible and
intangible) will determine the value of the business.
In many cases there will be an element of goodwill payable,
even where a business is not trading profitably. Although the
assets alone may be purchased on the open market, there is
often value in purchasing assets as a “Going Concern”, which may
include customer lists, relationships with suppliers, an assembled
workforce, brand awareness and reputation, among others.
Calculating intangible assets, including goodwill requires some
subjective judgement coupled with experience and the use of
market comparisons.
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