Going-Concern Value


DEFINITION of 'Going-Concern Value'

The value of a company as an ongoing entity. This value differs from the value of a liquidated company's assets, because an ongoing operation has the ability to continue to earn profit, while a liquidated company does not.

BREAKING DOWN 'Going-Concern Value'

This value includes the liquidation value of a company's tangible assets as well as the present value of its intangible assets (such as goodwill). The going-concern value is worked into the purchase price of a company, and is the main reason why the purchase price of a company tends to be higher than the current value of the assets of the company.

For example, the liquidation value of Widget Corp. is $10 million. This sum represents the current value of inventory, buildings and other tangible assets that can be sold assuming that the company is completely liquidated. However, Widget Corp.'s going-concern value could very well be $60 million, as the company's reputation of being the world's leading widget producer and its ownership of patents and associated rights for widget production mean that the company should have a large steady stream of future cash flows.

  1. Goodwill

    An account that can be found in the assets portion of a company's ...
  2. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  3. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  4. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Liquidation

    1. When a business or firm is terminated or bankrupt, its assets ...
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