Net Asset Value Method: When to Use it in Business Valuations
Consider using the Net Asset Value Method for valuing a business when:
- The company holds significant tangible assets, and there are no significant intangible assets.
- There is little or no value added 10 the company’s products or services from labor.
- The balance sheet reflects all the company’s tangible assets; that Is, the company has not expensed any tangible assets that continue to benefit the company.
- The company is expected to continue as a going concern.·
- The ownership Interest being valued is either a controlling interest or has the ability to cause the sale of the company’s assets.·
- The company has no established earnings history or a volatile earnings/cash now history.
- A significant portion of the company’s assets are composed of liquid assets or other investments (such as marketable securities, real estate investments, mineral rights).
- The business depends heavily on competitive contract bids, and there is no consistent, predictable customer base.
- It is relatively easy to enter the company’s industry (for example, small machine shops and retail shops).
- The company is a start-up business.
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck.
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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this investment professional on FINRA's BrokerCheck.