Calculator · Net asset method

Adjusted net asset value

Value a holding company, an asset-heavy business or a company in wind-down as its assets less its liabilities, each restated from book to market or fair value, with tax on revaluation gains and the costs of disposal.

When the net asset method fits

The adjusted net asset method values a business as the sum of its assets at market or fair value less its liabilities (IVS 103, cost approach). It fits holding and investment companies, asset-heavy businesses such as property or shipping companies, businesses that earn less than their cost of capital, and liquidation analyses.

For a profitable operating business it leaves out goodwill and other unidentified intangibles, so it understates value; use an income approach and treat the net asset value as a floor. A buyer of the shares inherits the tax base of the assets, so part of the tax on revaluation gains is deducted. On a liquidation premise, use realisable amounts and deduct the costs of disposal.

Related: Cost approach · Equity bridge · DLOM · Control premium · Model notes

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