Going Concern Value

Also found in: Financial, Acronyms.

Going Concern Value

The value inherent in an active, established company as opposed to a firm that is not yet established.

The value of the assets of a business considered as an operating whole.

As a component of business value, going concern value recognizes the many advantages that an existing business has over a new business, such as avoidance of start-up costs and improved operating efficiency. In this sense, the going concern value of a firm represents the difference between the value of an established firm and the value of a start-up firm.Going concern value also indicates the value of a firm as an operating, active whole, rather than merely as distinct items of property. U.S. Bankruptcy law, for example, has recognized the need to preserve going concern value when reorganizing businesses in order to maximize recoveries by creditors and shareholders (11 U.S.C.A. § 1101 et seq.). Bankruptcy laws seek to preserve going concern value whenever possible by promoting the reorganization, as opposed to the liquidation, of businesses.

Going concern value also implies a firm's ability to generate income without interruption, even when ownership has changed (Butler v. Butler, 541 Pa. 364, 663 A.2d 148 [Pa. 1995]).

Going concern value is distinguished from the concept of good will, which refers to the excess value of a business that arises from the favorable disposition of its customers. Good will may include the value of such business elements as trade names, trade brands, and established location.

Further readings

Bernstein, Donald S., and Nancy L. Sanborn. 1993. The Going Concern in Chapter 11. New York: Practising Law Institute.

Oswald, Lynda J. 1991."Goodwill and Going-Concern Value: Emerging Factors in the Just Compensation Equation." Boston College Law Review 32 (March).

References in periodicals archive ?
Each year's figure represents the amount to be deducted from going concern value to reflect the several elements of HHT's "brand name premium" in the Mar del Sol hotel market.
197 intangibles except goodwill and going concern value (whether amortizable or not) are placed in Class IV, and goodwill and going concern value (whether amortizable or not) are placed in a new Class V.
34) The gain computation includes foreign goodwill and going concern value.
Under bankruptcy case law, "[t]he valuation of the debtor's business and assets can be based on a number of appraisal approaches that have been widely accepted by bankruptcy courts, including replacement value, net asset value, liquidation value, going concern value, comparable corporation value, capitalization of earnings and discounted future earnings.
However, where the overlapping ownership does not exceed 50%, the transferee partnership may amortize the goodwill and going concern value if the transferor partnership elects under Sec.
An allocation to nonamortizable going concern value or goodwill is required, the handbook suggests, if the acquired business is profitable or includes any element the Service considers goodwill.
19) The only assets covered by the anti-churning rules are goodwill and going concern value.
These new anti-churning rules apply only to intangible assets not amortizable under pre-RRA law, such as goodwill and going concern value.
22) the Tax Court extended the abandonment cases to intangible assets such as goodwill and going concern value.
197, which allows taxpayers to amortize intangible assets, including goodwill and going concern value, over a 15-year period.
It's just that the nine are considered as a going concern, while the rest will have to be sold as real estate assets, probably at a minimum going concern value and maybe even at a price substantially lower than any current market valuation.
The challenge of how to handle going concern value has been a recurring issue for appraisers--incidents pop up periodically, spark a going concern value debate, settle down and then disappear only to reappear years later.