Legal Definitions - going value

Going Value refers to the worth of a business or asset as an active, operating entity, rather than its value if it were to be shut down and its individual assets sold off. It accounts for the business's ability to continue generating revenue, its established customer base, brand reputation, operational systems, and skilled workforce. Essentially, it's the value of a business as a functioning enterprise that is expected to continue operating into the foreseeable future.

• Example 1: Sale of a Thriving Bookstore

  Imagine a beloved independent bookstore that has been a community staple for decades. It has a loyal customer base, a well-curated inventory, experienced staff, and a reputation for hosting popular author events. If the owner decides to sell the business, the "going value" would be significantly higher than simply the sum of its physical assets (books, shelves, cash register). The going value would include the established brand, the customer goodwill, the existing operational systems, and the future income potential from continued sales and events. A buyer would pay for the opportunity to acquire a ready-made, profitable operation, not just a collection of books and furniture.

• Example 2: Valuation of a Software Startup

  Consider a new software company that has developed an innovative mobile application with a rapidly growing user base, but is not yet consistently profitable. If an investor or larger tech company were to acquire it, they would assess its "going value." This valuation wouldn't just be based on the company's current financial statements or the cost of its servers. Instead, it would heavily consider the value of its intellectual property (the app's code and design), its expanding user network, the potential for future revenue streams (subscriptions, advertising), and the talent of its development team. The going value reflects the potential for future growth and profitability as an ongoing enterprise, even if current profits are low or non-existent.

• Example 3: Insurance Claim for a Manufacturing Plant

  A manufacturing plant experiences a fire that severely damages its production line but leaves the building structurally sound. When assessing the insurance payout, the "going value" of the damaged equipment might be considered. If the plant is expected to resume operations after repairs, the value of the specialized machinery isn't just its scrap metal price. Instead, it's valued based on its contribution to the plant's overall operational capacity and its ability to produce goods, which is crucial for the business to continue as a going concern. The insurance might cover the cost to repair or replace the equipment to restore the plant's full operational capability, reflecting its value within an ongoing business rather than as isolated, damaged components.