going-concern value


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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 ?
If management has an incentive to underestimate liquidation values when the firm's prospects are poor, then companies that perform poorly relative to their (unbiased) going-concern value estimates should exhibit strong performance relative to their (understated) liquidation values.
TEI submits that there is no statutory basis for denying like-kind treatment for goodwill or going-concern value.
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.
relationship between the different sources of going-concern value and
Enterprise loss represents the amount of going-concern value destroyed in liquidation, and is defined as one minus the ratio of liquidation value to reorganized firm value.
It is beyond the scope of this article to deal with a thorough discussion of going-concern value versus real estate value.
1031(a)-2(c)(2), a business's goodwill and going-concern value are not like-kind to the goodwill and the going-concern value of another business.
The going-concern value of any hospitality property is as much influenced by competitive position in terms of its business as it is by real estate parameters.
Of these, the most difficult to measure are potential loss of goodwill and going-concern value.
Immediately before the effective date of the election, the fair market value (FMV) of FS's assets, including intangible assets such as goodwill and going-concern value, was less than the sum of its liabilities.
The going-concern value of each store is calculated in table 1.
In fact, exchanges of goodwill and going-concern value of dissimilar businesses (a restaurant and an auto dealer) can never be like kind, while exchanges involving similar businesses can qualify as like kind--but, according to the IRS, only in rare or unusual circumstances.