Going concern value refers to the extra worth that a property holds because it is part of an ongoing business operation. This value is derived from the business's ability to continue functioning and generating income, even if ownership changes. Essentially, it reflects the potential for future earnings and operational stability that a business possesses.
This term is often used in business law, particularly in contexts involving mergers and acquisitions, business valuations, and bankruptcy proceedings. Understanding going concern value is crucial for legal professionals when assessing the financial health of a business or determining its sale price. Users may find it beneficial to utilize legal templates from US Legal Forms to navigate related processes effectively.
Here are a couple of examples of abatement:
For instance, a restaurant that has established a loyal customer base and consistent revenue streams would have a significant going concern value. If the owner decides to sell the restaurant, this value reflects not just the physical assets but also the ongoing business activity and future earning potential. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Considerations |
|---|---|
| California | Going concern value may be assessed differently in business valuations due to state-specific regulations. |
| New York | Legal standards for determining going concern value can vary based on local business practices. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Difference |
|---|---|---|
| Liquidation Value | The estimated amount that would be received if assets were sold off individually. | Going concern value includes ongoing business operations, while liquidation value does not. |
| Fair Market Value | The price at which property would sell in an open market. | Going concern value considers future earnings, while fair market value focuses on current market conditions. |
If you are involved in a business transaction or valuation, understanding going concern value is essential. Consider consulting a legal professional for tailored advice. Additionally, you can explore US Legal Forms for templates that can assist you in drafting necessary documents and navigating the process.
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It is the additional value a property has because it is part of an ongoing business that can continue to generate income.