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 ?
* Class VII assets: These consist of good-will and going-concern value (whether or not the goodwill or going-concern value qualifies as .a Sec.
It is unclear when HUD began its policy of allocating a portion of the net operating income and of the going-concern value to proprietary earnings, but James K.
going-concern value. Part I of this Response explains that they find no
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.
The information required to be reported from the parties of an applicable asset acquisition include 1) amounts allocated to goodwill or going-concern value, 2) amounts allocated to other categories of assets or specific assets, and 3) other information the IRS deems necessary or appropriate.
[section] 1.1031(a)-2(c)(2) provides that goodwill and going-concern value of dissimilar businesses are not of a like kind and, further, that goodwill and going-concern value of similar businesses are of like kind only in rare and unusual circumstances.
The residual method allocates the purchase price among seven asset classes, starting with the most liquid assets (with cash as class I) and moving on to assets with lesser liquidity (with goodwill and going-concern value as class VII).
This framework is comparable to one provided in Figure 2.1 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 fact, even the going-concern value of an agency (tangible assets plus intangible assets, such as goodwill) may have little bearing on the actual purchase price of an agency.
the remaining cases, going-concern value was small or nonexistent.
According to the IRS, when a corporation distributes "clients and customer-based intangibles" to its shareholders, IRC sections 331 and 336 apply; such intangibles include the corporation's client base, client records, workpapers and goodwill (including going-concern value).
We define our estimates as the difference between the going-concern value and the liquidation value of the firm's assets.