Glossary · Reading the business
In short
This valuation method estimates an asset's value by calculating the cost to replace it new, minus depreciation. It's often used for valuing tangible assets like real estate or equipment.
You'll encounter the cost approach in appraisal reports when valuing significant tangible assets, such as owner-occupied commercial real estate or specialized equipment. It helps establish a floor value for these assets, complementing income-based valuations for the overall business. Understand how this approach contributes to the total business valuation.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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