PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. If the company is deemed to be salvageable, then the appointed insolvency practitioner acting as administrator will actively try to sell the company as a going concern, and market the business for sale accordingly. Offers will be listened to and it is the administrator’s job to accept the offer which best satisfies the company’s creditors. This deal may well be the highest aggregate bid, or instead it could be the deal which offers the greatest amount of cash upfront rather than as part of an instalment plan.
Earning value approaches are the most popular means of business valuations, but that doesn’t mean it’s the right choice for you. In fact, a combination of these three methods may be the best way to get a fair and accurate value for your company. The best way to get the fairest valuation is to hire an experienced business valuator to advise you on the best methods of how to evaluate your business. A business valuation is the process of determining the economic value of a business, giving owners an objective estimate of the value of their company.
What Are the Audit Processes? 7 Key Processes You Should Know
External events that create economic uncertainty may have a significant impact on a company’s ability to continue as a going concern and might require robust assessment and entity-specific disclosures. Management typically develops plans to address going concern uncertainties – e.g. refinancing of debt, renegotiating breached covenants, and sale of assets to generate sufficient liquidity to continue to meet its obligations as they fall due. IFRS Standards do not prescribe how management should evaluate its plans to mitigate the effects of these events or conditions in the going concern assessment. Impacts from a fall and winter COVID-19 surge may bring further uncertainty to many companies. Management should continually evaluate the effects of COVID-19 on the company’s going concern assessment, including information obtained after the reporting date and up to the date the financial statements are authorized for issuance.
Although US GAAP is more prescriptive than IFRS Standards, we would also expect under IFRS Standards that management plans are achievable and realistic, timely and sufficient to address the going concern uncertainties. A group of investors in Silicon Valley Bank is suing KPMG, the lender’s audit firm, because it did not raise doubts about a going concern in a filing a few weeks before the bank’s sudden and spectacular collapse. As companies have been upended by the pandemic, high inflation and pummeled by rising interest rates, going-concern warnings in company filings have spiked, according to Audit Analytics, a research firm. A going concern is a company that will continue to operate for at least a year. But the term is rarely brought up unless a company is in trouble — that is, in cases where it has doubts it could continue as a going concern.
