A good name sometimes brings more profit than the actual business activity. The real situation is when the balance sheet is zero, but the market price of the enterprise is quite noticeable. This is primarily due to business reputation- such an intangible asset that brings very real daily income and will - if nothing happens - continue to bring it in the future.

The need to assess goodwill may arise in the most different situations. Most often, the price of business reputation is calculated before selling a business - in order to justify the price of the company to a potential buyer. The goodwill price has great importance and when expanding a business through franchising. And a timely assessment of goodwill can be of absolute importance in various legal proceedings. For example: if the state decided to lay a federal highway through the territory of the plant and is going to compensate the enterprise only for the book value of assets, then you can put forward a claim for damages not only within the limits of the assessment of tangible property, but also within the limits of damage due to loss of business reputation. The assessment of goodwill is no less important in claims for the protection of business reputation - both with the same franchisees, if they do not behave as the parent company would like, and with other companies that encroach on the integrity of the person.

Goodwill assessments are based mainly on two methods: assessing excess income due to a high reputation and assessing the difference between the value of the business as a whole and the value of its tangible assets. In the first case, the average market price of similar goods or services is first calculated. The difference between the price of the enterprise in question and this average shows the “name premium.” Taking into account sales volumes in physical terms, the additional income received by a company with a high reputation is calculated. Based on this indicator, the desired value of the goodwill price is derived.

The second option is an expert assessment of the price of a business and an expert assessment of the price of property, which can somehow be determined and fixed. The difference between these two figures will be considered the price of business reputation.

The third option, quite rarely used due to technical complexity, is assessment by analogy. This option compares the price of transactions for the sale of similar (in terms of field of activity and scale, as well as territorial location) unpromoted businesses and the price for which the buyer is willing to buy the business being valued. The difference is considered goodwill.

The accounting valuation option, the only one permitted by Russian legislation, can only be implemented after the sale of the enterprise. Here, the price of goodwill is defined as the nominal purchase price of the enterprise minus the accounting value of its assets. This amount can be written off through depreciation charges.

The only way to put business reputation on the balance sheet before selling property is to inextricably link it with the exclusive right to own a trademark, service mark, etc. Then you can evaluate the intangible asset and enter the resulting value into the “intangible assets” item of the balance sheet.

So, in cases where a company is not sold, there is no automatic assessment of its business reputation. Therefore, in order to substantiate your claims - to a competitor or to the media - you must have documentary evidence of the price of goodwill. Such a document is an assessment report that complies with the legislation of the Russian Federation and standards appraisal activities. The report must be completed by an independent licensed appraisal organization that has insured its professional activities.

In the absence of such a document, any claims of the company regarding damage to business reputation have no basis. Therefore, for enterprises that begin to experience an increase in profits without increasing material investments or discover a competitor who has come from nowhere, copying activities and at the same time deceiving consumers, it makes sense to take care of obtaining an appraisal report - then it will be possible to present evidence to the court material damage from the actions of third parties.

There are additional tax consequences when selling a business with goodwill. The seller receives a profit that is not compensated by any costs and is fully subject to profit taxation. VAT on sales at a price different from the balance sheet price is calculated according to a special procedure prescribed in Art. 158 Tax Code of the Russian Federation. If the seller of the enterprise is an individual, then the taxation of the seller is much easier to deal with. Depending on the period of ownership of the enterprise (and its price), the seller will have to pay 13% income tax individuals or don't pay anything.

There is an international accounting method. IFRS 22 Business Combinations recommends that goodwill be calculated as the difference between the acquisition costs (investment) and the investor's share of the fair (ie estimated) value of the identifiable assets and liabilities acquired as at the date of the transaction. It is the positive difference that is called goodwill and is recognized as an asset on the balance sheet.

The enterprise's own business reputation, as an expectation of economic benefits associated with the actions of this enterprise, cannot be recorded as an intangible asset.

But there are only two cases when it is necessary to know the exact value of business reputation: when selling a company and after damage has been done to the reputation. Therefore, domestic companies often do not see the point in knowing the specific price of their reputation. Assessing goodwill allows a company to better understand how it is perceived by its business environment and develop a set of measures to improve the level of its own business reputation. The expert method is quite sufficient for this.

When applying the method of sociological surveys, we find out opinions about the company from people belonging to its target audiences. They can be representatives of the executive and legislative branches, market analysts, investors and shareholders (their attitude determines the reaction of the stock market), funds mass media, consumers of products.

As practice shows, such an assessment turns out to be the most accurate. All other methods can only provide detailed confirmation or dot the i's if controversial issues arise. The willingness of consumers to use the services of a given company is the main content of reputation. Therefore, this commitment determines the value of goodwill.

The main disadvantage of this method is that it is not so easy to find out the opinions of people with real influence, due to their busyness or reluctance to speak sincerely. However, any opinion poll suffers from this.

In addition, it is hardly worth converting the percentages of opinion poll data into monetary units. Otherwise, it may lead to unexpected results.

The next method of qualitative approach is expert, which in turn is divided into two subtypes: rating and recommendation. The first includes the compilation of business reputation ratings by independent organizations. The recommendatory method consists of discussing the company's goodwill by experts from PR companies and providing advice on how to change it.

The main feature of the rating method is that the company that wants to evaluate its reputation does nothing itself. The ratings are compiled by respected independent organizations. Because of this, just getting into it increases the reputation of the company being assessed. They are covered by Fortune magazine and the Financial Times newspaper.

In addition to business reputation ratings, there are ratings close to them corporate governance(RKU). In Russia, they are compiled by Standard & Poor's and the Institute of Corporate Law and Governance. Within the framework of the RKU, many factors that directly affect the level of a company's business reputation are assessed. For example, the analysis examines the relationship between shareholders, management, the board of directors and other financial interested parties. Therefore, although these two ratings are not interchangeable, RCUs nevertheless work to improve business reputation. It is known that attempts are being made to create their own base of “undisciplined” counterparties, in particular, executive bodies. state power St. Petersburg maintains a register of unscrupulous suppliers, which is taken into account when making decisions on concluding government contracts. A similar register is maintained by the Moscow Government (Resolution of the Moscow Government dated October 24, 2006 No. 825-PP “On the register of business reputation of partners of the Moscow Government” as amended on June 15, 2010)

The recommendatory subtype of the expert method is being actively used by PR companies. Just as in the rating, experts analyze each component of the business reputation of the company being assessed, but do not make any comparison with other market participants. Research involves collecting, summarizing and analyzing expert assessments. Descriptive characteristics of the company's reputation and image are identified. But at the same time, qualitative parameters are not translated into quantitative ones, much less into financial ones. As a result of such a study, an analytical report appears, which allows you to obtain a lot of information for managing the company and planning its activities.

The assessment method based on the technologies of Brand Finance and Interbrand companies comes from the field of marketing and is based on the statement that reputation is a brand. It refers to the quantitative approach.

According to this model, the calculation of the value of business reputation occurs in two stages. The first is to identify excess income generated by goodwill. At the second stage, the obtained result is multiplied by a special coefficient, the method for finding which is the know-how of Brand Finance and Interbrand. But it is known that it is calculated by experts according to such criteria as leadership, internationality, stability. The method for calculating this coefficient is the most weak side method. In addition, according to Elena Kovaleva, it is more fair for companies operating in the retail market. In other words, the marketing origin of the method is felt.

The Russian follower of the methodology was the V-RATIO company. Based on Interbrand and Brand Finance technologies, this company has completely developed objective technique assessing the value of a brand, which can also be used to assess the value of business reputation.

Determination of excess income received from business reputation:

There is a hypothetical food company that wants to know the value of its goodwill. Its sales were $500 million in 2010. To find how much is generated from goodwill, the industry-specific capital-employed-to-salesratio is determined. This “K” coefficient is considered natural for this industry, based on the fact that all companies have “zero” business reputation. For food industry K=0.32. To achieve sales of $500 million, a company with “zero” goodwill needs to use capital of $160 million:

$500 million x 0.32 = $160 million

Based on existing market profitability standards (for Russian food companies - about 15%), the amount of operating income obtained not from business reputation is estimated:

$160 million x 15% = $24 million

But the actual operating income received (found out from the reporting) amounted to $100 million. Therefore, $76 million was received through the work of the brand. All that remains is to subtract taxes from this result.

$100 million - $24 million = $76 million.

Business reputation accounts for up to 90% of a company's value.

The concept of “business reputation” first appeared in the 15th century in England. Initially, business reputation was associated with the advantages of the territorial location of an organization (shop, store). Business reputation was assessed based on the loyalty of the surrounding population. Subsequently, this category was filled with additional advantages, and already in the 19th century, business reputation was part of the assets of the enterprise.

In general understanding business reputation - this is a set of intangible factors considered as a whole that allow a given company to have a certain competitive advantage and thereby generate additional income.

There is no single interpretation of the concept of business reputation. Most often, business reputation is considered as a tool for reflecting in an organization’s reporting the difference between the company’s sale price and the book value of its assets.

Abroad, business reputation is called goodwill, but these concepts differ in many ways.

The Civil Code of the Russian Federation defines business reputation as a non-property right that belongs to legal entity from the moment of its formation and constitutes an integral part of its legal capacity.

Business reputation is characterized by a number of specific features:

Has no material substance

It is one of the most indicative criteria for assessing the work of top managers (characterizes the increase in the value of the company)

Absolutely unique

Not alienable from the company

Cannot be directly used in production and commercial activities

Not obvious in terms of identifying the costs of creating this resource

Objectively assessed only under certain circumstances

Extremely variable in valuation compared to other assets

It is one of the key indicators in assessing the investment attractiveness of a company.

Business reputation was introduced into economic circulation in the Russian Federation relatively recently, and therefore:

There is no understanding of the essence of this asset among the majority of enterprise managers

Insufficient experience has been accumulated in valuing this asset

There are not enough qualified specialists to evaluate this asset.

Business reputation, being a comprehensive characteristic of the company, includes two main components:

Intra-company business reputation (internal component) – reflects the accumulated potential of the organization and relationships with counterparties. The accumulated potential is characterized by: efficiency technological culture

and company connections Extra-company business reputation (external component) - includes the factor of hope, expectation and prospects for the company. If the first component is fairly constant in assessment, it develops over the years and does not disappear over time. a short time , then the second component is extremely variable, it is it that most strongly influences market value

companies. Business reputation, being part of the company's market value, to a certain extent consists of a holistic assessment by various counterparties. Concept

business reputation includes 2 components:

Information (descriptive), which is formed by counterparties and their perception of the company

Appraisal – assessment of specific aspects of the company’s activities. :

Classification of business reputation

By cost:

Positive – when the market value of the company exceeds the book value of its net assets

Negative - when the market value of a company is lower than the book value of its net assets

According to the method of occurrence:

Acquired business reputation – upon acquisition of a company, or upon its acquisition or merger

Internally created - not shown in the balance sheet

Combined – arises in the process of development of the acquired company

By accounting method:

Goodwill is an asset and is capitalized

Goodwill is an expense and is written off as operating expenses.

It is a factor that reduces the owners’ capital and is written off against reserves

By assessment time:

In case of purchase and sale

In case of merger or acquisition For acceptance

management decisions When compiling financial statements

in accordance with IFRS requirements

When assessing damage caused to business reputation. All currently in use

methods for assessing business reputation can be divided into:

Indirect - determine the value of business reputation in accordance with the economic meaning, i.e. as the difference between the market value of the company on the valuation date and the value of its net assets on the valuation date. All indirect methods use the following scheme:

The value of the company as a going concern is determined

The value of the adjusted net assets of the enterprise, including identifiable intangible assets, is determined

Direct - determine the value of business reputation as a direct object of assessment. These methods are more important for assessing business reputation.

When assessing business reputation, they also distinguish qualitative and quantitative approaches . With a qualitative approach The expert method and the method of sociological surveys are used to assess business reputation.

The specific value of business reputation can be determined quantitative approach , within which the excess profit method is most often used, or the assessment of business reputation based on the sales volume indicator.

Excess Profit Method is based on the definition of reputation as a brand that helps a company make more profit compared to the situation if it were selling a non-branded product. According to this technique, calculation is carried out in 2 stages:

Identifies excess income that business reputation presumably generates

The result obtained is multiplied by a certain coefficient, which takes into account the recognition of the organization and is calculated expertly, taking into account such categories as leadership, stability, and the ability to enter the foreign market.

Disadvantage: a methodology is required to calculate the coefficient.

When calculating the value of business reputation excess resource method(a variation of the previous method) the effect from the use of own and borrowed funds is taken into account. This method is a modification of the excess profit method.

DR (business reputation) = ( )*D

ETC - net profit

R – return on total assets

A – value of total assets

D – share own funds in the structure of the enterprise's liabilities.

Business reputation assessment based on product sales volume indicator determined by the following formula: DR=

– average annual net profit of the company being assessed

Average annual revenue of the company being assessed

R – industry average product profitability ratio

a-capitalization coefficient of excess profit.

Weaknesses of the methods used in assessing business reputation:

According to IFRS, goodwill is the excess of the purchase price over the fair value on the day of the transaction. In this case, fair market value is a price based on the current market value, determined by the ratio of supply and demand at which the buyer and seller enter into a transaction (IAS22). IAS38 states that goodwill is recognized as an asset only when a transaction occurs; internally generated goodwill cannot be recognized as an asset.

Existing on this moment Methods for determining the value of business reputation are not universal. There is not yet a method that would take into account such elements as the qualifications of employees, the reputation of top managers, a favorable economic location and other similar factors in the value of business reputation.

Methods for assessing business reputation (goodwill)

In assessing the business reputation of an enterprise, this is the amount by which the value of the business exceeds the market value of the financial, material and part of the intangible assets of the enterprise reflected in financial statements.

In other words, an enterprise's goodwill represents that part of the value of an enterprise that exists only with that enterprise and cannot be attributed to any specific asset.

The value of a business's goodwill arises when a business earns a return on assets or equity that is generally above the industry average.

There are methods for assessing the business reputation of an enterprise (goodwill):

• o accounting method;
• o excess profits;
• o formulaic.

Accounting method. Business reputation of the enterprise, calculated accounting method, is the difference between the purchase price (acquisition costs) of the company (enterprise) and the total value of all its identifiable assets and debt obligations (in liabilities).

The sequence of determining the value of an enterprise's business reputation (goodwill) using the accounting method:

• o the price (costs) of acquiring the enterprise (Zp) is determined;
• o the book value of tangible assets is determined on the date of sale (acquisition) of the enterprise (BStma);
• o the book value of assets is adjusted so that their market value (RStma) is determined;
• o the value of separately identified intangible assets (separable from the enterprise) is determined from the balance sheet as of the date of sale (acquisition) of the enterprise (Stna);
• o all liabilities, all accounts payable of the enterprise are determined (Ab);
• o the value of an enterprise’s business reputation (goodwill) is determined as the difference between the purchase price and the market value of all tangible assets and separately identifiable intangible assets, minus the accounts payable (liabilities) of the enterprise:

St 6m = Zp - (RStma + Sleep) - Vol. (9.16)

Example. Company "A" paid company "B" 1,090,000 thousand rubles. for 6,000,000 ordinary shares. There are a total of 10,000,000 shares of Company B's common stock outstanding. Therefore, the investor's share is 60% (6000: 10,000 x 100%).

Direct expenses of company "A" for the acquisition of company "B" amounted to 2,000 thousand rubles. The consolidated balance sheet of company "B" at the time of purchase is presented in table. 9.7. Determine the value of the goodwill of company B, which was acquired by company A.

Table 9.7

Balance sheet (consolidated) of company B (at the time of purchase)

• 1. The market value of assets and the bond issue is determined.
• 1.1. Calculation of the market value of a bond loan with a coupon yield of 6% at a discount rate of 8% and maturity in 4 years.

Calculation procedure.

Coupon interest (payments) on bonds: 200,000 x 0.06 = 12,000 thousand rubles.

Total amount of payments on bonds:

Sob = 200,000 x (1 + 4 x 0.06) = 200,000 + 48,000 = 248,000 thousand rubles.

Current value of the total amount of payments on bonds:

And purchase price = 12,000 x = 39,745.52 thousand rubles.

And the main amount = 200,000 x (1 + 0.08) -4 = 147,006 thousand rubles.

The present value of the entire bond issue is equal to 39,745.52 + 147,006 = 186,751.5 thousand rubles.

Market value of the bond loan as of the valuation date: RUB 186,751.5 thousand.

• 1.2. The market value of assets and liabilities of company B, identified as a result of revaluation as of the valuation date, was:
  • - reserves: 95,000 thousand rubles;
  • - land: 420,000 thousand rubles;
  • - buildings: 550,000 thousand rubles;
  • - equipment: 80,000 thousand rubles;
  • - bond loan: 186,751.5 thousand rubles.

Discount rate 8% (interest rate on the market at the time of purchase), repayment period: 4 years.

• 2. Procedure for calculating business reputation (goodwill).
• 2.1. Investment costs: 1,090,000 + 2000 = 1,092,000 thousand rubles.
• 2.2. A normalized balance sheet (not an accounting balance sheet) is drawn up for the purpose of evaluating company “B”, taking into account the market value of assets and liabilities identified as a result of revaluation (Table 9.8).

Table 9.8

2.3. The value of net assets (equivalent to the company’s equity capital) is calculated:

Net assets = Equity = Assets - (Short-term liabilities + Bond debt) = 1,590,000 - (155,000 + 186,751.5) = 1,248,248.5 thousand rubles.

2.4. Investor's share in the net assets of company B at book value:

Investor's share = Net assets x Investor's share = 1,248,248.5 x 0.60 = 748,949.1 thousand rubles.

2.5. The difference between investment (purchase) costs and the value of net assets is 1,092,000 - 748,949.1 = 343,050.9 thousand rubles.

Thus, the value of the business reputation of company “B” acquired by company “A” is 343,050.9 thousand rubles.

Excess Profit Method proceeds from the fact that all intellectual property objects, including unidentified (non-allocated) NML enterprises, participate in the formation of the enterprise’s total profit. The value of an enterprise's business reputation (goodwill) using the excess profit method is considered as the value of part of the intangible assets that create profit above the market average.

The sequence of determining the value of an enterprise's business reputation (goodwill) using the excess profit method:

The average industry profitability (Po) is calculated as the ratio of the annual net profit (NPr) to the average annual cost of the industry's own funds (Sko):

Rho = ChPr/Sko;

The profitability (Рп) of an operating enterprise is determined as the ratio of the annual net profit (NPr) to the average annual cost of the enterprise's own funds (Skp):

Rp = ChPr/Skp;

Excess profit (EP) is determined, for which the difference between the industry average profitability and the profitability of the enterprise is multiplied by the average annual cost of equity (ACC) of the enterprise:

DPri = (Pn - Po) x Sqp;

• - capitalization ratio (Kk) is calculated;
• - the value of intangible assets is calculated as the quotient of dividing the amount of excess profit by the capitalization ratio:

Sleep = DPri / Kk;

The part of the value of intangible assets attributable to the assessed goodwill is determined.

This method is used when the difference between the industry average profitability and the enterprise profitability is positive. This difference determines the degree of excess profit in a given business.

Example. Based on the analysis results financial condition The enterprise has compiled a normalized balance sheet (Table 9.9).

Table 9.9

Normalized balance sheet of company "B"

Normalized (average annual) net profit 240,000 thousand rubles. Average return on equity by industry (profitability by equity) 15%. Capitalization rate 20%.

We calculate the amount of equity capital (SC):

SK = Assets - Liabilities = 1,590,000 - (155,000 + 186,751.5) = 1,248,248.5 thousand rubles.

The industry average return on equity (return on equity) is 15%, so the return (average profit) on equity is:

ChPro(sk) = 1,248,248.5 x 0.15 = 187,237.28 thousand rubles.

Then the excess profit is:

240,000 - 187,237.28 = 52,762.725 thousand rubles.

The value of goodwill is determined as the quotient of excess profit divided by the capitalization ratio:

St good = 52,762.725: 0.2 = 263,813.63 thousand rubles.

If data on industry average profitability is insufficient or absent, and excess profit has to be determined based only on enterprise data, then use formula method. Its essence lies in the fact that instead of the industry average profitability, retrospective data on the enterprise’s profit are used.

Calculation sequence:

• 1) the average income (net profit) for the retrospective period is determined;
• 2) the average annual market (not book value) value of tangible assets for the same retrospective period is determined (RStma);
• 3) from the average annual market value of tangible assets, the average annual values ​​of separately identified intangible assets, but not included in balance sheet, and all obligations.

The result obtained is the value of assets for the formula (RStma - IMA - Ob);

• 4) the profit of material assets is determined according to industry indicators of the rate of return ( i pr.neg 1tp): RStmasr - NMA - Ob) x i np. from p;
• 5) from the amount of net profit received, the profit from tangible assets is subtracted: ChPsr - (RStmasr - NML - Ob) x i etc .neg ;
• 6) if there is excess income, then this income is capitalized:

Sfm = [ChPsr - (Stmasr - NMA - Ob) x i pr.neg ] / i To

Example. Determine the value of goodwill if, but the results of the balance sheet analysis and financial results the following was revealed:

• - industry rate of profit indicator: i ave.neg = 15%:
• - profitability of company i k = 20%;
• - financial indicators are presented in table. 9.10.

Based on retrospective data of the enterprise's profit, a table is compiled. 9.10:

Table 9.10

Determination of net profit on average tangible assets, thousand rubles.

Excess profit: 240,000 - 128,486 = 111,514 thousand rubles. The cost of business reputation (inseparable intangible assets) when i k - = 20%:

St good - 111,514: 0.2 - 557,570 thousand rubles.

Liquidation value when determining the value of an enterprise (business) using the cost approach, it represents the value that the owner of the enterprise can receive upon liquidation of the enterprise and the separate sale of its assets.

The assessment work includes several stages.

• 1. The latest balance sheet is taken.
• 2. A calendar schedule for the liquidation of assets is being developed, since the sale various types assets of the enterprise requires different time periods.
• 3. The gross proceeds from the liquidation of assets are determined.
• 4. The estimated value of assets is reduced by the amount of direct costs. Direct costs associated with the liquidation of an enterprise include commissions for appraisal and law firms, taxes and fees that are paid upon sale, taking into account the liquidation calendar as of the valuation date at a discount rate that takes into account the risk associated with this sale.
• 5. The liquidation value of assets is reduced by the costs associated with holding the assets until they are sold, including the costs of maintaining inventories finished products and work in progress, preservation of equipment, machinery, mechanisms, real estate, as well as management costs for maintaining the operation of the enterprise until its liquidation.
• 6. Operating profit (loss) of the liquidation period is added (or subtracted).
• 7. Preferential rights to severance pay and payments to employees of the enterprise, claims of creditors for obligations secured by a pledge of the property of the liquidated enterprise, debt on mandatory payments to the budget and extra-budgetary funds, and settlements with other creditors are deducted.

Thus, the liquidation value of an enterprise is calculated by subtracting from the adjusted value of all assets on the balance sheet the amount of current costs associated with the liquidation of the enterprise, as well as the value of all liabilities.

Determining the final value of the business value assessment

After reading this chapter, you will be able to determine the final valuation of the enterprise.

International business valuation standards recommend, and Russian standards enshrine as mandatory, three valuation approaches - cost, comparative and profitable, which necessitates harmonization of the results obtained, since these approaches are applied to the same object within the same valuation procedure.

To derive the final value of cost calculated by three approaches and valuation methods, we use various ways determining the weighting coefficients necessary to derive the value of a business based on the weighted average formula. In addition to the methods of mathematical and subjective weighing described in the monographs of S. Pratt, the method of expert qualimetry, the probabilistic approach and the method of hierarchy analysis (MAI) are also used. The method uses a criteria tree in which general criteria are divided into specific ones. For each group of criteria, importance coefficients are determined. A means of determining the coefficients of importance of criteria or the criterion value of alternatives is pairwise comparison. The comparison result is assessed on a point scale. Based on such comparisons, the importance coefficients of the criteria are determined, the evaluation of alternatives is determined, and the overall rating is found as a weighted sum of the criteria ratings.

The proposed methods for harmonizing assessment results are heuristic in nature, i.e. do not have strict scientific evidence. However, these methods have found widespread practical use in assessment activities because of its simplicity and clarity.

Rice. 10.1.

Empirically, a weighted average was determined to determine the final cost:

o when using two methods, use the following formula:

where C min - min the calculated value of the cost, determined by any method; C max - max is the calculated value of the cost, determined by some method.

o when using three methods, use the following formula:

(10.3)

where C min - min the calculated value of the cost, determined by any method; C max - ptah the calculated value of the cost, determined by any method; C av - the average calculated value of the cost, determined by some method.

The final value of the cost, calculated by three approaches and valuation methods, and the justification for this value are included in the report.

Cost assessment acts as a criterion for the effectiveness of management decisions that can lead to a decrease or increase in the value of the enterprise.

The value of an enterprise (business) is reflected in the value of securities.

Enterprises can be different: large or small, experienced or just starting out, successful or developing, with a good business reputation and those that have not yet gained significant weight in their field. All this affects the final value of the company, but Lately It is the assessment of goodwill that is critical.

Why is it necessary to assess a company’s business reputation?

The value of assets is a value that, in principle, determines the value of an enterprise and should be taken into account when selling or merging, but, as practice shows, in fact, purchases and sales are made at some other prices, less or more than assets are actually worth. This suggests that, in addition to the material expression of the value of a particular enterprise, there are intangible assets that largely determine its final price. In most cases, an appraisal of property and assets is necessary.

What is goodwill?

This term is quite widely known in foreign countries, and literally it means “ good will“, that is, how much customers are willing to pay for the opportunity to use the goods or services of a particular company. The buyer may wish to purchase at a cost favorable to the company, exceeding the real value of the assets, or, conversely, agrees to purchase it at a price much less than the specified value. Depending on this, there are such concepts as positive or negative business reputation.

Valuation specialists interpret this concept as follows: “Goodwill is a reflection of the difference obtained from comparing the real value of the company’s assets with the price that real buyers are willing to pay for the right to own an organization from the position of a brand or trademark, the company’s business reputation.”

The most preferable definition for entrepreneurs is this definition of goodwill: this is a value that reflects the actual market value of business reputation successful company, and so successful that it can regularly receive a consistently high income from its activities. This value does not apply to all legal entities, but only to those that are so successful that their income exceeds the average typical for a particular area of ​​business. So such a concept as goodwill is of interest only to those organizations and companies that can call themselves and their activities quite successful. Valuation of goodwill may be necessary only in one case: when the owner of the company changes.

To accurately determine the value of this intangible asset, you will need the help of experienced specialists who know everything about the nuances of conducting such an examination. Experts must also have experience in preparing relevant documents so that the results of the examination can be used officially by the customer of the service at all levels.

What is being assessed?

When assessing goodwill or any other assets that are not tangible, but significantly affect the value of the company, those assets that are identified with a brand (logo) or trademark are taken into account. In order to correctly determine and evaluate the actual business reputation of an enterprise, a specialist from an appraisal company needs to analyze all the elements of the business and the degree of trust characteristic of a particular company. These are the determining factors that encourage customers to use the goods and services of a given company, as a result of which the company can receive excess profits from the sale of goods and services, including intangible assets.

Traditional methods for determining the value of a company's business reputation

The experts of our independent valuation company, like all professionals in this field, use standard generally accepted methods when assessing goodwill. These include:

• calculation of excess profit, which is directly related to the fact that the company being evaluated can earn much more profit from the sale of a branded product than other competitors selling identical but unbranded products;
• the balance sheet method, which determines the value of a company's business reputation as the difference between the total value of the business and its assets (which can be both tangible and intangible).

Documents to be provided when assessing goodwill

In order for an appraisal company specialist to determine such a value as goodwill or give a reasonable assessment of business reputation, he needs the following documents:

• copies of all constituent documents;
• if they were released securities, and they were issued, then these documents are also needed by the appraiser;
• establishing the type of activity, providing comprehensive information about organizational structure enterprises;
• in the event that there is rented or leased real estate, then copies of these agreements are required;
• a package of financial reporting documents for a three-year or five-year period;
• information about fixed assets and assets, including intangible ones;
• when a company has accounts payable or receivable, then this information is needed to assess goodwill.

In addition, the appraiser will require information about whether the company has subsidiaries or holdings; long-term plan enterprise development.

Business reputation– one of the important factors influencing the value of a business.

The concept of “goodwill” originated in medieval England and was associated mainly with the successful location of a business. The main criterion for its assessment was the loyalty of the local population. Over time, the concept of goodwill expanded to include additional benefits, which in the 19th century made it an integral part of a company's assets.

Today, business reputation is defined as the totality of all intangible benefits that bring a particular company competitive advantages, resulting in excess profits. Due to the lack of a common understanding, goodwill is very often viewed as a financial reporting tool that reflects the difference between the market value of a company and the book value of its structured resources.

Key Features

Despite a number of discrepancies between these concepts. Russian legislation considers business reputation as a non-property right inherently belonging to a legal entity. To her key features include:

• lack of material component;
• ability to generate excess profits;
• uniqueness;
• inseparability from business;
• impossibility direct application V production processes;
• immensity for authentication of expenses for the formation of an intellectual resource;
• the possibility of objective assessment only under certain conditions;
• high estimated variability;
• one of the significant values ​​in assessing the investment attractiveness of a business.

The concept of goodwill has only recently been introduced into economic activity countries. For this reason, many domestic managers do not understand the essence of this asset. It also explains the shortage of specialists and the lack practical experience in assessing business reputation, which can be both internal and external.

1. As an internal component of the company, it reflects the acquired resource capabilities of the business and its connections with counterparties (the effectiveness of socio-technological culture).
2. As an external component of the company, it represents the expectations for the expected future of the business.

Unlike the internal component, which has been developed over the years and is fairly stable in valuation, the external, highly variable component has the maximum impact on the market value of the business.

Main components and classification

A generalized assessment of business reputation includes two components:

• informational and descriptive – formed by various contractors based on the company’s own vision;
• evaluative – recognition of certain aspects of activity.

Business reputation is classified according to several criteria:

1. By method of appearance:

• acquired – during a merger, consolidation or purchase of a business;
• created within the company - is not reflected in the balance sheet;
• combined – emerging during the development of the acquired business.

2. According to price indicators:

• positive – the company’s market price exceeds the book value of its net assets;
• negative – the market price is lower than the book value of the company’s net assets.

3. According to accounting methods:

• capitalized asset;
• expenses written off as current;
• an indicator that reduces the owner’s capital and is written off against reserves.

4. At the time of assessment:

• merger, acquisition, purchase and sale;
• for the purposes of successful management;
• financial reporting under IFRS;
• assessment of damage caused to business reputation.

Assessment methods

The practice of assessing business reputation has been described as part of an art or science, but most often it represents accurate calculations, which can be indirect and direct.

Indirect valuation methods, guided by economic feasibility, determine the value of goodwill as the margin of the company's market value and the price of its net assets at the time of valuation. Each of them is calculated according to a single scheme:

• determining the price of the company as a going concern;
• determination of the value of identifiable net assets;
• calculation of the difference between the obtained values.

Direct valuation methods are more significant because they determine the price of business reputation as a direct object of valuation.

There is also a qualitative and quantitative assessment approach. The first evaluates business reputation using expert rating and sociological survey methods in calculations. The second one applies the volume of products sold and the excess profit method.

The excess profit method is based on comparative analysis additional income brought by the company as a brand and received from the sale of unbranded goods. It involves step-by-step calculations:

• Identification of excess profits generated by intangible resources.
• Multiplying the result by a coefficient that takes into account the company’s recognition.

It is calculated using an expert method, taking into account factors such as success, stability, and the prospect of entering global markets (but the lack of a unified methodology is the main drawback).

The excess resource method (a modified version of the previous version) uses in calculations the result of using its own and third-party funds, obtained on the basis of a specific formula.

Unfortunately, every estimation method has weaknesses.

Under IFRS, goodwill is treated as the purchase amount in excess of the fair market value at the time of the transaction. According to IAS38, goodwill is recognized as an asset only when a transaction occurs.

To date, universal methods for assessing business reputation that take into account in its value such intangible assets as personnel qualifications, leadership of top managers or economically advantageous placement still remain undeveloped.