Appraisal of Business

Are you looking for business appraisal which is as comprehensive as it is competent? We are the right partner for you. There are various methods of business appraisal. The method to be used depends mainly on the industry in which the company is active, on the company size and the cause of the appraisal. Generally speaking, there are two assessment methods (which can be combined):

Income Approach

The income approach is the method most widely used in Germany. The income approach is - in its modified form -­­­ the appraisal method specified by law for business appraisal for determination of the inheritance and gift taxes. It is accordingly used by the financial administration and is widely accepted in court disputes.

In order to determine the equivalence of the alternative investment to the business to be appraised in this case in terms of risk, spending power and availability, certain value mark-ups and markdowns must be taken into account. In the simplified income approach for the appraisal of a company value for the purpose of inheritance and gift taxes, however, a capitalisation factor defined by law is employed.

Net Asset Value Method

The net asset value method is virtually based on the idea of the "reproduction" of the company to be appraised. The net asset value is calculated from the sum of the replacement cost of the necessary business assets minus the debts (loan capital at nominal value) plus the value realisable for assets not necessary for business.

High assets of the company to be appraised will influence the company's future earning capacity value. A high level of equity (= high asset value) has a positive influence on the balance sheet debt-equity ratio with the effect of better rating and lower loan interest. Companies with a high asset value prove to be more resistant to crises and, as a rule, also have a higher distribution volume.

Generally, the net asset value is of original importance only in the case of capital-intensive manufacturing establishments and companies owning above-average assets (such as real estate companies).

Combination of Income Approach and Net Asset Value Method

The income approach and net asset value method can also be combined for appraisal. In this combination method, the earning capacity value and the net asset value are added up, and the result is weighted depending on the type of company in question.

We are pleased to advise you and will jointly determine which manner of business appraisal is best in your case. Simply agree a date for your first meeting with us and get to know our team. We look forward to seeing you!

Are you looking for business appraisal which is as comprehensive as it is competent? We are the right partner for you. There are various methods of business appraisal. The method to be used depends mainly on the industry in which the company is active, on the company size and the cause of the appraisal. Generally speaking, there are two assessment methods (which can be combined):

Income Approach

The income approach is the method most widely used in Germany. The income approach is - in its modified form -­­­ the appraisal method specified by law for business appraisal for determination of the inheritance and gift taxes. It is accordingly used by the financial administration and is widely accepted in court disputes.

In order to determine the equivalence of the alternative investment to the business to be appraised in this case in terms of risk, spending power and availability, certain value mark-ups and markdowns must be taken into account. In the simplified income approach for the appraisal of a company value for the purpose of inheritance and gift taxes, however, a capitalisation factor defined by law is employed.

Net Asset Value Method

The net asset value method is virtually based on the idea of the "reproduction" of the company to be appraised. The net asset value is calculated from the sum of the replacement cost of the necessary business assets minus the debts (loan capital at nominal value) plus the value realisable for assets not necessary for business.

High assets of the company to be appraised will influence the company's future earning capacity value. A high level of equity (= high asset value) has a positive influence on the balance sheet debt-equity ratio with the effect of better rating and lower loan interest. Companies with a high asset value prove to be more resistant to crises and, as a rule, also have a higher distribution volume.

Generally, the net asset value is of original importance only in the case of capital-intensive manufacturing establishments and companies owning above-average assets (such as real estate companies).

Combination of Income Approach and Net Asset Value Method

The income approach and net asset value method can also be combined for appraisal. In this combination method, the earning capacity value and the net asset value are added up, and the result is weighted depending on the type of company in question.

We are pleased to advise you and will jointly determine which manner of business appraisal is best in your case. Simply agree a date for your first meeting with us and get to know our team. We look forward to seeing you!