Adjusted Net Asset Method

What is the 'Adjusted Net Asset Method'

The adjusted net asset method is a business valuation technique that changes the stated values of a company's assets and liabilities to reflect their estimated current fair market values better. By adjusting asset or liability values up or down, the net effect offers values that can be used in going-concern assessments or liquidation scenarios.

This method may also be called the "asset accumulation method."

BREAKING DOWN 'Adjusted Net Asset Method'

In certain cases, it may be difficult to assemble an accurate business valuation using market or income based approaches. These methods are common in dividend discount, capitalization and cash flow models. The alternative method focuses on assets and liabilities of a business enterprise.  

The adjusted net asset method would include tangible and intangible asset during the adjustment process. Also included are off-balance sheet assets and unrecorded liabilities, such as leases or other notable commitments. The difference between the total fair market value of the adjusted assets and the total fair market value of the adjusted liabilities is the "adjusted book value" (what the business is considered to be worth).