Appraisal Method - Asset Based

15 Feb 2017 10:13 AMTroy Potter
Appraisal Method - Asset Based




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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