• BusinessValuation

Valuation Approach - Asset-Driven Approach

Another common method attributes value to a businesses based solely on its assets. In particular, the Adjusted Net Asset Method calculates the difference between a business’ assets that includes equipment, property, and inventory, and intangible assets—and its liabilities, both of which are adjusted to their fair market values. Asset valuations are also a great way to assess and monitor internal spending and utilisation of a business’ capital resources. Overall this asset-driven approach is especially useful if your business mostly holds assets.

To conduct an asset-driven assessment, first you have to make a list of all your business assets and allocate them with a monetary value. For equipment or other depreciating assets, that value is usually somewhere between the sale price and the depreciated value. In most cases, you should be able to estimate the equipment or asset value based on your familiarity of the item.

The estimated monetary value that you place on the equipment or asset can be considered as material value, even if you do not value it according to the current market value. For bigger assets such as real estate, usually potential buyers prefer to see a professional property valuation done, which is a service we organise as well.

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