going-concern value

(redirected from Going-Concern Values)

Going-concern value

The value of a company to another company or individual in terms of an operating business. The difference between a company's going-concern value and its asset or liquidation value is deemed goodwill and plays a major role in mergers and acquisitions.

Going-Concern Value

The value of a company as long as it remains in business. One calculates the going-concern value by adding the value of its goodwill and income to its net asset value. This is an important calculation when determining the appropriate purchase price in a merger or acquisition. Mortgage lenders also use it to determine the value of an income-producing property.

going-concern value

The value of a business in operation,taking into account the goodwill and the value of the income, in addition to hard assets, such as real estate and equipment. When appraising a project to develop income-producing property,the appraiser will usually provide two numbers—one for the project on the day of completion,with no tenants,and one when it reaches stabilized occupancy and is a going concern.Lenders who take mortgages on income-producing property with intensive management aspects—such as hospitality properties—usually obtain a going-concern rider for the title insurance so that coverage will be increased above the value of the real property.

References in periodicals archive ?
This is a type of appraisal work where the going-concern values of personal property and intangible assets would be useful flit were possible to do so in a definitive manner.
1 of The Appraisal of Real Estate, 13th edition (Appraisal Institute, 2008, page 30), where the going-concern value of a business enterprise is divided between tangible property (composed of personal property and real property) and intangible property of various types.
In order to use the residual technique for estimating real property value, an appraiser of a going concern would need a definitive mechanism for estimating the going-concern value of the personal property, the going-concern value of the business intangibles, the net operating income for the overall property, the capitalization rate for the going-concern personal property, the capitalization rate for the going-concern business intangibles, and the capitalization rate for the going-concern real estate.
First, the lack of availability of good-quality care homes, particularly in the South-East of England, coupled with improved profitability has pushed up going-concern values.
theories changes in firms' going-concern values and improvements
even if firms could be sold for their full going-concern value.
Liquidation values in bankruptcy plans may be understated, and going-concern values may be overstated, since a firm has an incentive to try to convince creditors that the firm is worth more alive than dead.
If we assume that assets can be sold for their estimated going-concern value, a typical firm's return matches the return to a benchmark portfolio.
By employing standard valuation techniques, with a strong reliance on market rent, an appraiser can identify and estimate real estate, business, and going-concern values of a modern shopping center, and can test them for both consistency and reasonableness.
The answers are most likely a combination of effects contributing to the mall's going-concern value.
In fact, the real estate values are not different; use value and/or going-concern values are different.
Because many lenders are not fully aware of the security for their loan, appraisers should educate lenders on the use value, going-concern value, and market value of the real estate for special-purpose properties.