Legal Definitions - going-concern value

Definition: The value of a commercial enterprise's assets or of the enterprise itself as an active business with future earning power, as opposed to the liquidation value of the business or of its assets.

Example: A company that is profitable and has a strong customer base has a higher going-concern value than a company that is struggling and has few customers. This is because the profitable company has the potential to continue earning money in the future, while the struggling company may not.

Explanation: Going-concern value is the value of a business as an ongoing concern, taking into account its potential to generate future profits. It is important to distinguish this value from the liquidation value, which is the value of a business if it were to be sold off in parts. The example illustrates how a company's profitability and customer base can affect its going-concern value. A profitable company with a strong customer base is more likely to continue generating profits in the future, and therefore has a higher going-concern value than a struggling company with few customers.