The backlog is often an intangible asset which is strategic for make-to-order manufacturing firms. The valuation of backlogs arises in the case of the sale both of one or more contracts and of firms or a business units, when the expert estimates assets and liabilities by using the asset-based approach and including intangible assets in valuation. Despite this, the issue appears to be poorly treated in literature at the national and international lev-els. The Excess Earnings Method (EEM) is strongly accredited internationally in both theory and practice for valuing customer-related assets, such as customer relations, commercial contracts, customer lists and backlogs too. However, theoretical contributions on the use of the EEM in the specific valuation of backlogs are quite rare. The paper studies the application of the EEM just to the valuation of backlog. The objective is not only to describe the estimate process carried out with the EEM of this specific asset but to develop a critical analysis of the method in its application to such valuation object, in order to grasp the strengths and weaknesses of the method itself. We conclude that the EEM is highly appreciable for its strong economic rationality as well as for its international recognition in the context of professional business valuation services. It is also true, however, that it denotes elements of uncertainty related to the multiple estimates to be made, appears extremely complex, is a time-consuming process and that its application requires a high level of specialist valuation knowledge and skills by the expert.

L’APPLICAZIONE DELL’EXCESS EARNINGS METHOD NELLA STIMA DEL PORTAFOGLIO LAVORI

Gonnella E
Co-primo
;
Talarico L
Co-primo
2018-01-01

Abstract

The backlog is often an intangible asset which is strategic for make-to-order manufacturing firms. The valuation of backlogs arises in the case of the sale both of one or more contracts and of firms or a business units, when the expert estimates assets and liabilities by using the asset-based approach and including intangible assets in valuation. Despite this, the issue appears to be poorly treated in literature at the national and international lev-els. The Excess Earnings Method (EEM) is strongly accredited internationally in both theory and practice for valuing customer-related assets, such as customer relations, commercial contracts, customer lists and backlogs too. However, theoretical contributions on the use of the EEM in the specific valuation of backlogs are quite rare. The paper studies the application of the EEM just to the valuation of backlog. The objective is not only to describe the estimate process carried out with the EEM of this specific asset but to develop a critical analysis of the method in its application to such valuation object, in order to grasp the strengths and weaknesses of the method itself. We conclude that the EEM is highly appreciable for its strong economic rationality as well as for its international recognition in the context of professional business valuation services. It is also true, however, that it denotes elements of uncertainty related to the multiple estimates to be made, appears extremely complex, is a time-consuming process and that its application requires a high level of specialist valuation knowledge and skills by the expert.
2018
Gonnella, E; Talarico, L
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11568/943695
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