RSM424H1 Lecture Notes - Lecture 18: Intangible Asset, Relative Risk, In Essence
11 Jun 2017
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Chapter 18 business acquisitions and divestitures assets versus shares. The very essence of a business operation is that it consists of a number of assets, both physical and intangible, that work together for the purpose of generating a long-term stream of profits. This value of a business as a going concern is tied to and dependent on its income-earning potential. It should be pointed out that a business does not have to be sold as a going concern. Presumably, a vendor will take whatever steps are necessary to obtain the highest price from the disposition of the business. The sale of a business can, therefore, involve the cessation of business operations followed by the sale of the individual assets that were used in the business. Earnings approach: a purchaser usually acquires a business for the sole purpose of operating it as a going concern.
