The going-concern value is the value of a business or its assets as an operating entity with the ability to generate future profits, rather than solely the value of its assets in a liquidation scenario. This encompasses factors such as goodwill. It is crucial to take into account the going-concern value when assessing the worth of a business for sale or any other purposes.
Going-concern value refers to the worth of a commercial enterprise or its assets as an active business with the potential to generate future earnings. It is distinct from the liquidation value, which represents the value of the business or its assets if they were to be sold off individually. For instance, a company that is profitable and has a solid customer base will have a higher going-concern value compared to a struggling company with limited customers. This is because the profitable company has the ability to continue earning money in the future, while the struggling company may not. The example demonstrates how a company’s profitability and customer base can impact its going-concern value. A profitable company with a strong customer base is more likely to sustain profitability in the future, resulting in a higher going-concern value, whereas a struggling company with few customers may have a lower going-concern value.
Going-concern value refers to the value of a business as an operating entity, including its assets, liabilities, and potential for future profitability.
Going-concern value is the value of a business as a whole, assuming it will continue to operate, while liquidation value is the estimated value of its assets if they were to be sold off individually.
Yes, going-concern value can be transferred or sold separately, often in the form of a business sale or acquisition.
Going-concern value is typically determined by considering various factors such as the business’s financial performance, market position, customer base, intellectual property, and future growth prospects.
Yes, going-concern value can be protected through various legal mechanisms, such as non-compete agreements, intellectual property rights, and confidentiality agreements.
Yes, legal disputes or litigation can potentially impact a business’s going-concern value, especially if they result in reputational damage, financial losses, or regulatory penalties.
Yes, going-concern value can be used as collateral for loans or financing, especially if the business has a strong track record and positive future prospects.
Yes, going-concern value can be transferred to heirs or beneficiaries as part of estate planning, often through the creation of trusts or the inclusion of specific provisions in a will.
Yes, changes in the legal or regulatory environment can impact a business’s going-concern value, particularly if they introduce new compliance requirements, restrictions, or market uncertainties.
Yes, going-concern value can be depreciated or amortized for tax purposes over a specified period, subject to applicable tax laws and regulations.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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