Liquidation value method in business valuation. What is the cost approach to business valuation? Determining the value of the business of an operating enterprise on the example of LLC "Enterprise A"

The second method of the cost (property) approach is salvage value method. Technically, it is similar to the method net assets. Factors that determine the value of an enterprise in liquidation will be discussed at the end of the section.

The liquidation value is the value that the owner of the enterprise can receive in the liquidation of the enterprise and the separate sale of its assets.

Evaluation work by this method includes several stages:

1. The last balance sheet is taken.

2. A calendar schedule for the liquidation of assets is being developed, since the sale various kinds assets of the enterprise requires different time periods.

3. Gross proceeds from the liquidation of assets are determined.

4. The estimated value of assets is reduced by the amount of direct costs. Direct costs associated with the liquidation of an enterprise include commissions for appraisal and law firms, taxes and fees that are paid upon sale. Taking into account calendar schedule liquidation of assets, the adjusted values of the assets being assessed are discounted to the valuation date at a discount rate that takes into account the risk associated with the sale.

5. The residual value of the assets is reduced by the costs associated with holding the assets until they are sold, including the costs of holding inventory finished products and work in progress, preservation of equipment, machinery, mechanisms, real estate, as well as management costs to maintain the operation of the enterprise until its liquidation.

6. Added (or subtracted) Operating profit(losses) of the liquidation period.

7. Subtracted preemptive rights on severance pay and payments to employees of the enterprise, claims of creditors for obligations secured by a pledge of property of the liquidated enterprise, debt on mandatory payments to the budget and extra-budgetary funds, settlements with other creditors.

Thus, the liquidation value of the enterprise is calculated by subtracting from the adjusted value of all assets of the balance sheet the amount of current costs associated with the liquidation of the enterprise, as well as the value of all liabilities.

Features of assessing the liquidation value of an enterprise

The basis for the occurrence of the liquidation value considered in this subsection is the presence of extraordinary or conditionally extraordinary circumstances leading to a violation of market factors. Such circumstances include sale time limit factor And forced sale factor.

It is possible to single out at least two types of forced implementation - economic and non-economic. The economic forced implementation differs from the non-economic one in that it still leaves a certain degree of freedom for the subject in making decisions about the implementation of the object. This "freedom" can be expressed in the possibility of choosing which object to sell, or in the possibility of the subject's participation in setting the price of the object being sold, etc. The non-economic forced sale leaves the subject practically no freedom in making decisions on the sale of the object and, as a rule, does not require the implementation of any economic calculations, including the assessment of the liquidation value.

An example of economic compulsion to sell can be a situation where an entity has to sell its asset to pay off its liabilities. In such a situation, the subject, apparently, still has a certain freedom both in choosing an object and in setting its price, etc., and, therefore, it may be necessary to carry out economic calculations, for example, an assessment of the liquidation value. An example of a non-economic compulsion to sell can be a situation in which an entity has to sell its asset “at gunpoint”. It is obvious that the latter situation does not leave the subject of freedom either in choosing an object, or in setting its price, etc., and therefore does not require the implementation of any economic calculations. In this work, we will consider economic compulsion to implement.

Let's consider typical cases in which these factors are inherent (Fig. 2.8) and dwell in more detail on each of the analyzed situations.

At liquidation of the enterprise there is a need to develop a clear schedule for the sale of property and the repayment of the company's debt (moreover, there are often situations when the total amount of income from the sale of property does not cover all debts). At the same time, the terms of exposure (pre-sale activities and the sale itself) are very limited due to the need for a fairly quick release from assets and repayment of debt. It is the question of available time that plays in this case a decisive role in the magnitude of value (ceteris paribus).

Rice. 2.8. Typical cases of salvage value occurrence

In turn, the duration of the time period is determined by the conditions of each specific case of liquidation. At the same time, it must be borne in mind that the very decision to liquidate can be either voluntary (that is, there is a planned action) or forced. As a rule, the first case gives greater variability in decision-making and allows you to develop more effective plans for the liquidation of the enterprise.

Forced liquidation in the process of bankruptcy is carried out when a decision is made to open bankruptcy proceedings based on the results of external management. The formed bankruptcy estate is subject to sale at an open auction. At the same time, the terms for the sale of property are extremely limited.

The implementation of collateral objects in the context of this issue is rather a hypothetical concept. In this case, the determination of the liquidation value is necessary to justify the lower limit of the loan, which is secured by the pledged property, and we are not talking about the actual fact of the sale of the object. However, in order to provide a loan, the lender needs to know at what price it will be possible to sell the collateral in a short time if the loan is not repaid. This value in some sources of literature is called collateral. However, it can be argued that, according to economic essence, it is also a liquidation one, since there are factors of limited time and forced sale.

The accelerated sale of other property due to the limited exposure time also makes it necessary to determine the liquidation value. At the same time, there are also several options for such implementation - either it is an initiative (voluntary) implementation, or forced (under duress), provided for current legislation. Thus, in the process of enforcement proceedings, the property seized by a court decision is sold, and within a period not exceeding two months from the date of seizure.

Thus, the liquidation value of the property is almost always lower than its market value. And this fact is negative for the seller of property and, of course, positive for the buyer.

Of course, the situation of bankruptcy and liquidation of an enterprise is an emergency. The probability of a positive solution to the problem of non-payment, which usually accompanies this situation, depends on the value of the property that the this enterprise. And not only the problems of non-payments, but also the solution of issues related to the material well-being of the employees of the enterprise, to a certain extent depend on the value of the property of the liquidated enterprise.

However, the assessment of the value of the enterprise is necessary not only in the event of liquidation of the enterprise. It is important in many other cases, for example, when financing a debtor's enterprise; when financing the reorganization of an enterprise; when changing the enterprise, carried out without litigation; when developing a plan for repaying the debts of an enterprise-debtor that is under the threat of bankruptcy; when analyzing and identifying the possibility of highlighting individual production capacity enterprises into economically independent organizations; when evaluating applications for the purchase of an enterprise; in the examination of fraudulent transactions for the transfer of property rights to third parties; in the examination of enterprise reorganization programs.

Estimating the liquidation value of an enterprise in a bankruptcy situation has a number of features, mainly due to the nature of the emergency itself. These features should be taken into account in the evaluation.

This type of assessment refers to the so-called active types, when, based on the results obtained, many stakeholders make appropriate management decisions.

Another feature of assessing the liquidation value of an enterprise is the high degree of dependence of third parties on the results of the assessment.

So, the assessment of the liquidation value of the enterprise is carried out in the following cases:

the enterprise is in a state of bankruptcy or there are serious doubts about its ability to remain an operating enterprise;

· the value of the enterprise in liquidation may be higher than in continuing operations.

Information for discussion

In everyday practice, there is a problem of normative and legislative regulation of the application of liquidation value and fixing its unambiguous interpretation.

For example, in accordance with the Federal Law of July 21, 1997 No. 119-FZ “On Enforcement Proceedings”, it is required to calculate the market value of property that must be sold at auction within 2 months. But, if it is sold at auction, that is, for a limited period of time, which is typical for non-market conditions of sale, then this does not correspond to the concept of market value enshrined in Article 3 federal law"On valuation activities in Russian Federation". Moreover, the concept of salvage value is defined in the "Appraisal Standards Mandatory for Application by Subjects of Appraisal Activity", approved by a decree of the Government of the Russian Federation.

In this case, appraisers should calculate not the market, but the liquidation value of the seized property. There is a contradiction between various legislative acts.

In the practice of business valuation, liquidation value is divided into three types.

1.Ordered salvage value. The sale of the assets of the enterprise is carried out within a reasonable period of time so that high prices can be obtained for the assets being sold. For the least liquid real estate of the enterprise, this period is about 2 years.

2.Forced salvage value. Assets are sold as quickly as possible, often at the same time and in the same auction.

3. The liquidation value of the termination of the existence of the assets of the enterprise. In this case, the assets of the enterprise are not sold, but written off and destroyed, and this place a new enterprise is being built, giving a significant economic or social effect. In this case, the value of the enterprise is negative, since certain costs are required to liquidate the assets of the enterprise.

Based general rules on the liquidation of legal entities established in Art. 61-65 of the Civil Code of the Russian Federation, the main difference between liquidation legal entity(enterprise) from its reorganization in any form lies in the fact that the liquidation does not imply succession, i.e., the transfer of the rights and obligations of the liquidated enterprise to other entities.

Voluntary liquidation of a legal entity (enterprise) is possible by decision of its participants. The Civil Code of the Russian Federation (clause 1, article 61) directly provides for the following grounds for the liquidation of a legal entity by decision of its participants:

a) expiration of the term for which the legal entity was created;

b) achievement of the purpose for which it was created;

c) recognition by the court of invalid registration of a legal entity in connection with violations of the law or other legal acts committed during its creation, provided that these violations are of an irremediable nature, as well as on other grounds that may be determined both by the discretion of the shareholders and by the indication of the law.

In practice, the work of each company is subject to analysis. In this case, it may apply profitable, costly, to business valuation. The need for analysis arises in the most different situations. Let's consider further how it is carried out.

General information

In international practice, experts use three approaches to assessment:

costly;
comparative;
profitable.

The analysis of domestic organizations is regulated by the industry-specific Federal Law, as well as federal standards (FSO). Each approach has its own evaluation methods.

Characteristics

The comparative approach includes three methods. In particular, the analysis of the capital market, industry coefficients and transactions is carried out. based on 2 options. They are the analysis of capitalization and discounted financial flows. The cost approach is also based on 2 methods: the method of net assets and They are used in almost all transformations of the organization. The analysis is performed during the acquisition or sale of production, corporatization of the company, absorption, merger, and so on.

Cost approach to estimating the value of an enterprise (business)

This version of analysis has one key feature that distinguishes it from others. Business valuation using the cost approach is element-by-element. As part of the analysis, the property complex is divided into certain components. Each received element is examined, its price is revealed. Finally, all the obtained indicators are summarized, and the total value of the enterprise is displayed.

Key areas

Cost Approach to Business Valuation combines:

Study of the accumulation of the organization's assets.
Adjusted balance sheet value or net asset method.
Determination of the liquidation price.
substitution method.

These options are combined according to one essential feature. They are based on determining the value of each specific type of property of the organization at current prices or the costs of creating a similar company (by the method of replacement) and subtracting the amount of all debts of the company. The analysis uses a single information base - balance.

Purpose

Typically used to obtain the information needed to make various decisions. management decisions. This is the essence of this analysis. It is possible to explain how a business is valued using the cost approach using the example of a company that is being sold, insured or liquidated. So, when selling a company, the market price is calculated by the method of accumulating assets. When insuring, it is most often determined. When closing a company, the liquidation price is calculated.

Advantages

The cost approach to business valuation has a number of advantages. The main ones can be considered:

The ability to take into account the impact of economic or production factors on price fluctuations.
Use of volumetric information base. Cost approach to business valuation based on both accounting and financial documents. This, in turn, allows you to get more reasonable results.
The ability to analyze the degree of development of the company's technology, taking into account the level of depreciation of real estate or equipment.

Disadvantages of the cost approach in business valuation

Meanwhile, along with the advantages, there are several negative points in the analysis. The specialist, taking them into account, may refuse to use. The most significant negative aspects of the method include:

Determining only the past price.
Inability to take into account the current market situation at the time of the analysis.
Static.
Inability to take into account the risks and prospects for the development of the company.
Lack of connection between the current and future results of a particular company.

The disadvantage of the cost approach in business valuation is as well as its complexity and complexity.

Net book price

The way to determine it is considered the simplest of all included in. To establish the net book price, all liabilities (short-term or long-term) are deducted from the value of the currency. The result is the monetary value of the firm's equity or its assets. The advantages of this method include:

Using reliable information only about the actual assets that are owned by the company. This method eliminates the abstractness that is inherent in other methods.
In market conditions, the method has the most complete database.

However, the method has several negative features:

It is impossible to take into account the efficiency of the company and the prospects for its development.
The situation on the market in terms of the ratio of supply and demand for similar companies is not taken into account.

Let's take a look at how a business is valued using the cost approach using an example. The initial balance sheet data is as follows (in c.u.):

OS - 5000;
reserves - 1000;
accounts receivable - 1 thousand;
cash - 500;
debt obligations - 6 thousand rubles.

In accordance with the conclusion drawn up by a specialist, the company's fixed assets are 30% more expensive, and raw materials and materials stocks are 10% cheaper. Accordingly, it will not be possible to collect 20% of receivables. Using the appropriate ratios, determine the book value:

1000 x 0.8 + 1000 x 0.9 + 5000 x 1.3 + 500 - 6000 = 2700.

Liquidation price

It is determined only in the case when the company, having stopped performing operations, begins to sell its assets and pay off liabilities. The liquidation value calculation allows you to get the lowest indicator in the price level. It reflects the minimum amount at which the company can be sold.

Adjusted book price method

It is considered one of the varieties of the cost approach. This method includes the final indicator of the balance sheet revision with the adjustment of the residual price of assets, taking into account the inflationary factor. In the analysis, a revaluation of funds is carried out. In this case, the result obtained at the same time is entered into the balance sheet. This allows you to determine the adjusted, net price, which, in essence, acts as an indicator of the equity of the company and its revaluation reserve.

substitution method

It is focused exclusively on the analysis of tangible assets and is valid only for capital-intensive companies. The assessment involves the calculation of the cost of full replacement of the company's funds while maintaining the current economic profile. The analysis is performed in a certain sequence. First, accounting and statistical documents are evaluated. These include:

Quarterly reports.
Statistical reporting.
inventory cards.

Based on the results of this comprehensive study, an idea is formed about the insufficiency or sufficiency of assets to pay off debt. After that, a property mass is created for evaluation. The most/minimum current or liquid assets. Then the total amount of the company's debt is formed and a repayment schedule is drawn up.

conclusions

The cost approach, based on the analysis of the company's balance sheet, allows you to get fairly objective indicators. According to some experts, it is the most reliable option in modern unstable economic conditions. The meaning of the appraisal is the most accurate calculation of the market value of the enterprise. All his assets are analyzed, including tangible, intangible and financial.

These funds are influenced by market changes and inflation. Accordingly, it does not always coincide with the market price. This, in turn, necessitates balance adjustments. It is for this purpose that each asset is assessed separately.

Once the current price of all the firm's liabilities has been determined, it is subtracted from the reasonable market value for the entire property. The result obtained will be the price determined by the cost approach. The calculation of the liquidation indicator is used in the analysis of bankrupt firms or in the event of an expected loss of solvency in the short term. This price shows the number of remaining financial resources after the sale of the company, repayment of direct costs and other costs.

Nuances

It should be noted that when performing an assessment of immovable objects of an enterprise, specialists should have at their disposal:

Construction and technical characteristics for each structure. It is formed in accordance with the data of the registration certificate, which, in turn, is issued at the BTI. In addition, information from the capital construction department must be attached to the characteristic.
Reference information. Information should include both the funds needed for repairs and the costs associated with restoration.

It is also worth noting that the company's value, determined using the liquidation price method, never corresponds to the real amounts. Here it is necessary to refer to paragraph 9 of the FSO. It says that the salvage value of an object reflects the probable amount for which it is possible to sell it during the exposure period.

The liquidation value method is based on determining the difference between the value of the property that the owner of the enterprise can receive upon liquidation of the enterprise and the separate sale of its assets on the market, and the costs of liquidation.

When determining the liquidation value of an enterprise, it is necessary to take into account all the costs associated with the liquidation of the enterprise: commission and administrative costs for maintaining the operation of the enterprise until its liquidation, expenses for legal and accounting services.

Liquidation value- this is the value of the appraisal object if the appraisal object must be alienated within a period less than the usual exposition period for similar objects. Alternatively, the salvage value is the value that the owner of the enterprise can receive when the enterprise is liquidated and its assets are sold separately.

When determining the liquidation value, a distinction is made three types of liquidation:

1) ordered;

2) forced;

3) liquidation with the termination of the existence of the assets of the enterprise.

Orderly liquidation is the sale of assets within a reasonable period so that maximum amounts can be obtained from the sale of assets. For the least liquid real estate of the enterprise, this period is about two years. It includes the time to prepare assets for sale, the time to communicate information about the sale to potential buyers, the time to think about the decision to purchase and accumulate funds for the purchase, the purchase itself, transportation, etc.

Forced Liquidation means that assets are sold as quickly as possible, often at the same time and in the same auction.

Liquidation with the termination of the existence of the assets of the enterprise is calculated in the case when the assets of the enterprise are not sold, but written off and destroyed, and a new enterprise is being built in this place, giving a significant economic or social effect. The value of the enterprise in this case is a negative value, since certain costs are required for the liquidation of assets.

The assessment of the enterprise at liquidation value is usually addressed when:

The business does not bring a satisfactory income in terms of volume and does not have good development prospects;

The company's current and projected cash flows from continuing operations are low compared to net assets and the company is worth more;

The company's current and projected cash flows from continuing operations are so low that its liquidation valuation is close to the company's valuation of operating enterprise;

The company is in the process of bankruptcy or liquidation;

A basis is required for making management decisions when financing an enterprise-debtor, financing the reorganization of an enterprise, etc.

The calculation of the liquidation value of the enterprise also includes several main stages.

1. The last balance sheet is taken.

2. A calendar schedule for the liquidation of assets is being developed, since the sale of various types of enterprise assets (real estate, machinery and equipment, inventory) requires different time periods.

3. Gross proceeds from the liquidation of assets are determined.

4. The estimated value of assets is reduced by the amount of direct costs. Direct costs associated with the liquidation of a business include commissions to appraisal and law firms, taxes, and
fees payable upon sale. Based on the asset liquidation calendar schedule, the adjusted values of the assets being valued are discounted to the valuation date at a discount rate that takes into account the risk associated with the sale.

5. The salvage value of assets is reduced by the costs associated with owning assets prior to their sale, including the costs of maintaining inventories of finished products and work in progress, maintaining equipment, machinery, mechanisms, real estate, as well as management costs for maintaining the operation of the enterprise until its completion. liquidation.

6. The operating profit (loss) of the liquidation period is added (or subtracted).

7. Priority rights to severance benefits and payments to employees of the enterprise, creditors' claims for mandatory payments to the budget and extra-budgetary funds, settlements with other creditors are deducted.

Making a final conclusion about the liquidation value of the enterprise, the appraiser must analyze the factors related to the property itself, and the factors that determine the level of management of the enterprise. If the situation of bankruptcy of the enterprise is caused by a low level of management, then this circumstance should not negatively affect the value of the liquidation value of the enterprise. If the causes of bankruptcy are a high degree of depreciation of both the active and passive parts of the enterprise's assets, negative location features, then these factors will significantly reduce the level of liquidation value of the enterprise.

Thus, the main feature of the cost approach is an element-by-element valuation, i.e. the property complex being valued is divided into its component parts, each part is evaluated, and then the cost of the whole property complex obtained by summing the values of its parts.

QUESTIONS AND TASKS FOR SELF-CHECK

1. What is the essence of the cost approach to business valuation?

2. What methods are used to assess the value of a business under the cost approach?

3. What are the features of the adjustment of the first and second sections of the balance sheet of the enterprise.

4. What are the main stages of valuation using the net asset value method?

5. Define salvage value. List the types of liquidation.

6. What are the main stages of evaluation by the liquidation value method.

7. What is common and different in the valuation of the enterprise by the method of net asset value and liquidation value?

LECTURE 10
VALUATION OF CONTROL AND NON-CONTROLLING SHARES

Plan

10.1. Methods for estimating the value of blocks of shares.

10.2. Valuation of non-controlling stakes.

10.3. Control premium, discounts for non-controlling nature of the package and insufficient liquidity.

When selling, acquiring or merging businesses, it is often necessary to determine their value.

Three main methods are used for this purpose. One of them is the cost approach to business valuation.

His essence

The cost approach establishes the value of the enterprise based on the amount of expenses for the resources necessary to ensure the full-fledged activity of the company, as well as their reproduction. That is, the price of a business is calculated taking into account the volume of assets and liabilities acquired by the organization in the course of its work.

Due to the peculiarities of the market, the real value of the business may differ significantly from the book value. Several factors influence this:

inflation;
usage various methods accounting of assets and liabilities;
market changes.

As a result of these conditions, the value of the organization may increase or decrease during the entire period of the company's operation.

When determining the value of an enterprise, a specialist can choose any of the three existing approaches (there are also). Cost is considered among them the simplest and most versatile. This option has its own scope, advantages, disadvantages, as well as a calculation procedure that is different from other methods.

The main formula for business valuation in this case is:

SK \u003d A - O, Where:

SC - equity;
A - asset;
Oh - obligations.

The result of calculations for this approach shows the cost of equity of the company.

You can learn more about this approach from the following video:

Scope, advantages and disadvantages

This approach is taken by the buyer ready business for cost comparison existing enterprise with the possible costs of creating a similar one.

It is most appropriate to use the cost approach to evaluate a company if:

the organization was recently established;
the company as a whole is evaluated;
the company is undergoing bankruptcy proceedings;
the liquidated business is assessed;
most of the assets are highly liquid, for example, the company's shares are traded on the stock market, there are investments;
The firm has large assets.

This approach has its positive and negative aspects of use.

The benefits of using it include:

the possibility of calculation in the absence necessary information for evaluation by other methods;
it can be applied to organizations whose purpose is not to generate income, for example, government agencies;
the results can be used to evaluate enterprises in an inactive market;
with its help, you can determine the value of work in progress, land, buildings.

There are two downsides to using it:

the financial and economic indicators of the company are not used in the calculations, that is, the features of the business, as well as the prospects for its development, are not taken into account;
normative indicators are used in the calculations, that is, the assessment using this approach is not fully based on market conditions.

What methods does it include?

The cost approach is based on two methods:

net assets.
liquidation value.

When calculating any of these methods, you need to use the data of the company. The appraiser chooses one of them based on the characteristics of the company.

net asset method

This method of calculation is based on the discrepancy between the balance sheet and market value of the property, obligations of the enterprise. Under this method, the appraiser must make an adjustment to the firm's balance sheet.

This event is held in several stages:

Implemented assessment of the market value of each property enterprises separately. At the same time, all types of assets are involved in this process - tangible, intangible, financial:
- To assess real estate, the total amount of costs for its acquisition or creation is determined first. Further, the amount of physical or moral depreciation is deducted from this value.
- Machinery and equipment are valued in a similar way.
- Inventories are converted to current value, and delivery costs are taken into account. Old and unusable objects are written off.
- Finished products are adjusted for market value. The price of products manufactured under contracts concluded with contractors is not subject to change.
- The value of cash and funds in bank accounts is not subject to adjustment.
- Inventories are valued at cost, while old items are derecognised. It is also possible to determine the estimated value as the difference between the expected sale price and the costs incurred.
- Shares and others securities adjusted for market value.
- The cost of accounts receivable is calculated based on the analysis of its occurrence and the possibility of repayment. At the same time, overdue is established, which is subject to full or partial write-off.
- Prepaid expenses, if their benefits are valid, are measured at nominal value. However, when considering an unstable business, such assets are most often not taken into account as real ones.
- , i.e. licenses, exclusive rights, results of intellectual work, business reputation are valued at market value.
Installed the company's current debt. The obligations of the enterprise are evaluated taking into account the timing of their occurrence. In this case, the discounting procedure is applied. That is, all debts are reduced to the current value on a single date for all these liabilities.
Produced calculation of the estimated cost of capital of the organization. It is calculated as the difference between assets and liabilities, the amount of which was previously established.

The formula looks like this:

SC = RA - TP, Where:

RA is the market value of the enterprise's assets;
TP - the current value of all the obligations of the organization.

The result of the calculations is the market value of capital, that is, the value of a 100% stake in the company.

Residual value method

This method is based on establishing the amount of the difference between the total value of the property that the owner of the enterprise can receive when closing the business after the sale of its assets, and the costs of conducting.

When using this method, all costs associated with the closing procedure should be taken into account:

expenses for the services of lawyers and accountants;
the cost of maintaining a firm until it closes.

The enterprise is evaluated according to this method in several stages:

The choice of liquidation value is substantiated. Not all companies can use this method for business valuation. The method is available only to those organizations that are in the process of closing either.
A schedule for the sale of assets is being developed. It is necessary to ensure maximum profit from the sale of property. Different types assets are sold in due time:
- real estate is sold on time from a year to two;
- the rest, that is, materials, stocks, can be sold immediately after a decision is made on the need to sell the property.
The current value of the property is calculated, excluding the cost of selling. At the same time, the revealed value of assets changes taking into account the costs of implementation.
The changed value of assets is adjusted as of the valuation date.
The liquidation period profit is taken into account.
Calculate the value of the company's liabilities. The adjustment is carried out for current and long-term debt. It also considers possible liabilities that are expected to arise during the liquidation process.
The liquidation value of the business is established. At the same time, the amount of operating profit is added to the value of assets and the amount of the company's liabilities is subtracted.

The formula here looks like this:

LS \u003d A + OP - P, Where:

LS - liquidation value;
A - assets;
OP - profit or loss of the liquidation period;
P - liabilities at current value.

The cost approach allows you to get a fairly objective idea of the value of the business. This fact is ensured due to the peculiarity of the method, which consists in the most detailed analysis of the property and the assessment of each object.

With the cost (property) approach to business valuation, the value of the enterprise is considered, taking into account the costs incurred. The balance sheet value of the assets and liabilities of the enterprise due to inflation, changes in market conditions, accounting methods used, as a rule, does not correspond to the market value. As a result, the task of adjusting the balance sheet of the enterprise arises. To do this, the fair market value of each asset of the balance sheet is first assessed separately, then the current value of the liabilities is determined, and finally, the current value of all its liabilities is deducted from the fair market value of the total assets of the enterprise. The result shows the estimated value of the company's equity capital.

The basic formula in the costly property approach is the following formula:

Equity = Assets - Liabilities.

This approach is represented by two main methods: net assets and salvage value.

net asset method

The net asset method is applied in the following cases: the company has significant tangible assets; the company is expected to continue to be a going concern.

The net asset value indicator is introduced by part one Civil Code RF to assess the degree of liquidity of organizations.

Net assets is a value determined by subtracting from the amount of assets joint-stock company accepted for calculation, the amount of its obligations accepted for calculation.

Conducting an assessment using the net asset methodology is based on the analysis of financial statements. She is an indicator financial condition enterprise on the date of assessment, the actual value of net profit, financial risk and market value of tangible and intangible assets.

The calculation by the net asset method includes several stages:

1) the reasonable market value of the real estate of the enterprise is determined;
2) the market value of machinery and equipment is estimated;
3) the cost of intangible assets is calculated;
4) the market value of financial investments (both long-term and short-term) is estimated;
5) inventories are translated into current value;
6) deferred expenses are estimated;
7) accounts receivable are estimated;
8) the company's liabilities are translated into the current value;
9) the cost of equity capital is determined by subtracting the current value of all liabilities from the fair market value of the sum of assets.

Residual value method

The liquidation value is assessed in the following cases: the company is in a state of bankruptcy, or there are serious doubts about its ability to remain a going concern; The value of a company in liquidation may be higher than in continuing operations.

liquidation Value represents the value that the owner of the enterprise can receive in the liquidation of the enterprise and the separate sale of its assets.

The calculation of the liquidation value of the enterprise includes several main stages:

1) a calendar schedule for the liquidation of assets is being developed, since the sale of various types of assets of the enterprise (real estate, machinery and equipment, inventory) is carried out during different time periods;
2) the gross proceeds from the liquidation of assets are determined;
3) the estimated value of assets is reduced by the amount of direct costs (commissions to legal and appraisal companies, taxes and fees). Taking into account the asset liquidation calendar schedule, the adjusted values of the assets being assessed are discounted to the valuation date at a discount rate that takes into account the risk associated with this sale;
4) the liquidation value of the assets is reduced by the costs associated with the possession of assets prior to their sale, including the costs of maintaining stocks of finished products and work in progress, maintaining equipment, machinery, mechanisms, real estate, as well as management costs to maintain the operation of the enterprise until its completion liquidation;
5) the operating profit (loss) of the liquidation period is added (subtracted);
6) pre-emptive rights to satisfy severance benefits and payments to employees, creditors' claims for obligations secured by a pledge of property of the liquidated enterprise, debts for mandatory payments to the budget and extra-budgetary funds, settlements with other creditors are deducted.