Going Concerns Appraisals

A going concern is an established and operating business with an indefinite future life. For certain types of properties, physical real estate assets are integral parts of an ongoing business.

Going-concern value includes the incremental value associated with the business concern. This is distinct from the value of the tangible real property and personal property. The value of a going concern includes an intangible enhancement of the value of the operating business enterprise produced by the assemblage of the land, buildings, labor, equipment, and marketing operations. This assemblage creates an economically viable business that is expected to continue. The value of the going concern refers to the total value of the Tangible and Intangible property attributed to business value. The value of the entire going concern has realty and non-realty component parts: tangible real property, tangible personal property and intangible business enterprise value. Examples of going concern properties are: Hotels, Motels, Convenience Stores, Car Washes, Quick Serve Restaurants, Bowling Facilities, Golf Courses, Senior Housing and Assisted Living Developments and Hospitals, to name a few.

The appraisal of a going concern property is difficult because it cross over into the business valuation world. While the real property may be a significant or even the dominate asset, in most instances the market value of the going concern is associated with its net income. The income generating capacity of the going concern is usually its most important aspect. While a sales approach and a cost approach are considered, the capitalization of the net income stream and using a discounted cash flow analysis to establish the present value of future cash flows, with consideration being given to the reversion, are typically the most important methodologies.

Going concern appraisals require experience, knowledge and expertise above and beyond valuations of typical commercial property types. Many real property appraisers are not trained, prepared or willing to appraise a going concern n due to the complexity of the appraisal process and scrutiny by their peers.

NMREC specializes in the valuation of going concern property types. We have many years’ experience appraising going concerns of all kinds. Our going concern appraisals are renowned for their transparency, accurateness and inclusiveness.