How do you handle non-betriebsnotwendiges Vermögen (non-operating assets)?
A core Valuation interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
Under IDW S1, non-operating assets (excess cash, investment properties, unused land, financial investments) are valued separately at fair value and added to the Ertragswert. Rationale: these assets don't contribute to operating earnings but have independent value. This is conceptually similar to adding 'non-core assets' to an EV in Anglo-Saxon practice.
WHAT INTERVIEWERS LISTEN FOR
- ✓Separate valuation at fair value
- ✓Add to Ertragswert
- ✓IDW S1 standard
- ✓No contribution to operating earnings
- ✓Similar to non-core assets in EV
COMMON MISTAKES
- ✗Ignoring non-operating assets entirely
- ✗Valuing at book value instead of fair value
- ✗Confusing with operating assets
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