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Asset Valuation
Buying or selling specific assets (e.g. plant and machinery or business property) as opposed to a whole business has a different approach to valuation. The value derived for an asset entirely depends on the nature of the assets being bough or sold. There are key and basic questions to bear in mind when assigning a value to any asset and these are:
1) Is the asset separable form the business? Separable assets are more valuable (e.g.: property) as non-separable assets would require further investment for integration.
2) Is there any comparable market information available? Use this to help guide your value range as a starting point.
3) How much does the asset make? Look at the income generated by the asset and consider using a discounted cash flow (DCF) method of assessing is value.
4) What are the costs required to maintain the assets? How much are the running costs and would there be any further expenditure required?
5) Benefit of having the asset? Think back to why you are buying the assets in the first place?
6) When you have arrived at value, step back and think, is this a fair value for the asset in questions? Would I be happy to pay this amount?
Once you have considered the above, you should be close or near a reasonable valuation for the asset in question. Of course, the actual value would be the price at which you strike a deal but negotiation can always influence a price either way.