When is NAV preferred over earnings-based methods?

NAV is appropriate when the company's value is driven by tangible assets or investments rather than trading profits, or when the business is not a going concern. Property companies and SPVs are typical examples.

Does NAV include goodwill?

Pure NAV is asset-based; goodwill may be added separately where a going concern is justified. Experts must state whether the conclusion is on a break-up or going concern basis.

Net Asset Value (NAV) - Asset-Based Valuation

Net asset value (NAV) values a business based on the fair value of its assets minus liabilities - at book value, fair value, or forced sale value depending on the legal context.

NAV is commonly used for property-holding companies, investment vehicles, loss-making businesses, and winding-up scenarios. Experts revalue properties and investments, identify contingent liabilities, and conclude on going concern versus break-up basis.

Common questions

When is NAV preferred over earnings-based methods?: NAV is appropriate when the company's value is driven by tangible assets or investments rather than trading profits, or when the business is not a going concern. Property companies and SPVs are typical examples.
Does NAV include goodwill?: Pure NAV is asset-based; goodwill may be added separately where a going concern is justified. Experts must state whether the conclusion is on a break-up or going concern basis.

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