We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is an Exit Value?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An exit value is the estimated price which would be received for the sale of an asset or transfer of a liability on the open market. People determine exit values for accounting purposes and these values may be used in a variety of ways. Exit values are distinct from entry values, which reflect the price which would be paid to acquire something.

To determine the exit value, it is assumed that the asset or liability would be transferred in an arm's length transaction. In this type of transaction, the parties involved do not know each other and negotiate through a third party to settle upon a price. It is generally believed that such transactions arrive at the most fair price because buyer and seller act in their own best interests and do not consider the interests of the other party, beyond the point of being willing to make some concessions to work out a deal which will close quickly.

Several different methods can be used to think about exit value. People can look at the present value of the asset, the current selling price, or the net realizable value. Because times are not always favorable for sales, one important thing to consider is what the current market conditions are. If the market is poor an exit value may be low because it is determined by acting as though something needs to be sold immediately and thus a strategic wait for a better price is not possible.

Exit values can be used in the assessment of a business by a valuator, a determination of a fair asking price, and a number of other settings. When calculating exit value, third party valuators are often used to avoid bias. The person who owns the asset or liability under consideration may be inclined to overvalue it or otherwise fail to estimate the value properly, while someone who has no interest in the value can make a more neutral estimate.

These values are usually calculated under the assumption that the entity which controls the thing being valued would be going out of business and liquidating. By contrast, real world values for things sold by companies which remain in business can be very different because these companies can afford to hold out for a good price and they are not liquidating large amounts of goods and alerting buyers to the fact that bargains may be obtainable with a little bit of negotiation.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By MissDaphne — On Oct 04, 2011

I think it's easy to use a fantasy money value for assets. Just because something has a certain "market value" in theory doesn't mean that you could quickly or easily find a buyer at that price - or even find one at all.

My brother used to collect Magic: The Gathering cards when he was a kid. He would talk about how much this card or that one was "worth" based on what it said in his Magic magazines. My father told him, "You want to know what that card's really worth? Take it down to the pawn shop and see how much they would give you for it."

I thought of the pawn reference after reading this article because of the reference to liquidation. It's kind of the same idea - how much can you get for an item when you're desperate and the buyer knows it?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.