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Enterprise component allocation: methodology discussion.(INSIDER'S PERSPECTIVE)

Real Estate Issues

| March 22, 2009 | Nelson, Roland D. | COPYRIGHT 2009 The Counselors of Real Estate. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

BUSINESS ENTERPRISE VALUE (BEV) HAS FOR MANY YEARS eluded a universally accepted method of appraisal. It has been the subject of much discussion, writing and even litigation. By definition intangible, BEV is difficult to pin down. This article reviews various methodologies for estimating BEV, and discusses how it relates to various types of real estate.

Business enterprise value is a component of going-concern value, which is defined in The Dictionary of Real Estate Appraisal, Fourth Edition, as:

1. The market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; also ...

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