The net asset value method determines the amount that would have to be spent to reproduce an established company at the current time. The resulting amount is referred to as the net asset value and is practically equivalent to the replacement value. Included in the net asset value are tangible assets such as inventories, the vehicle fleet or machinery. Intangible assets and assets of the net asset value include patents and software, as well as the customer base and supplier relationships. The reproduction costs for intangible assets are always only an estimate. Once the valuation of the intangible and tangible assets is complete, a company comparison must be undertaken, in order to obtain a realistic estimate of the company's value. On the basis of all the values determined and with the help of the net asset value, we can then calculate a range for the enterprise value.
It is important to note that the net asset value method is only one aspect of business valuation and does not take into account all relevant factors. It is therefore advisable to always combine the net asset value method with other methods such as the capitalized earnings method or the discounted cash flow method in order to obtain a comprehensive company valuation.