Valuation based on the assets of the company is relatively straightforward.
This method is the “tried and true” method: objective, proven and certain.
However, it is also prone to significant understatement. As intangible assets become the dominant driver of value in the business, the valuation method based solely on assets will be less likely to be relied upon by buyers and sellers.
So why do Banks still use this method? Security! Banks are very risk averse and they can seldom sell an intangible if called upon to do so as a result of business closure.
To read the full, original article click on this link: How much is your business worth: valuations based on assets versus cash flow [Part 2 of 3] | Anthill Magazine
Author: Kevin Lovewell
