Relevance of assets in business valuations

• Discusses the relevance of assets in going concern and break-up business valuations and valuations relating to particular sectors.

Business valuations may be undertaken with a view to a sale of a business or for tax purposes. They will also often need t o be carried out where litigation is in prospect, such as disputes between shareholders or partners, divorce cases, and cases involving a lost business opportunity. In addition, valuations may occasionally be required in personal injury or loss of profits cases in which a business has ceased trading or has been sold.

It is necessary to consider whether the primary focus of the valuation will be on the capitalised maintainable earnings of the business, on the value of discounted future cash flows, on its net asset base or on the capitalised value of dividends paid by the business. In general, if a business is a going concern, it is appropriate to consider