Asset Valuation for Investors: How It Works

July 26, 20223 min read
Asset Valuation for Investors: How It Works
Share on facebookShare on TwitterShare on Linkedin

Key Takeaways

  • Asset valuation is a procedure aimed at determining the right value of a specific asset. 
  • Scrutinized assets can be both tangible and intangible.
  • Asset valuation, which can be subjective, can help investors understand if the market price of the asset is fair, or if the asset is over/undervalued, which may potentially identify a dislocation and thus an investment opportunity. 

Machinery, real estate, stocks, options, bonds and even the goodwill of an organization all have a value that can be defined using different mechanisms. 

Asset valuation can be required when a company is a target acquisition, for instance, or for insurance purposes. 

Tangible vs Intangible Assets

Items such as structures, land, vehicles, and certificates of investment in marketable securities, as well as office equipment and cash on hand, are considered tangible assets (these are also referred to as fixed assets.) Intangible assets are logos, trademarks, franchise agreements, reputation, and intellectual property – such as patents and copyright.  

Intangible assets valuation can pose problems as it can be subjective, but existing models can help get around the issue. Intellectual property can fluctuate – if, for instance, a patent gets closer to expiration. Typically, however, valuations are conducted by professionals who have tested methods for both tangible and intangible assets, which may mitigate outcome volatility.   

A company’s goodwill in a merger or acquisition transaction can be particularly hard to measure, and it is usually determined “a contrario” as a plug between the price that the acquiring company is paying and the target company’s current equity valuation. 

Why Asset Valuation Matters

In the event  of a merger or a takeover, asset valuation can help determine the overall value of a business. For investors, especially in private equity, it can help determine whether the asked-for price for shares in a company is in line with the company’s actual value.

Collateralized loan applications normally require asset valuation for the asset that is intended to be used as collateral to help the lender ensure that its investment is sufficiently protected. For  publicly traded companies, assets on the balance sheets may require valuations to comply with transparency regulations. Asset valuation and depreciation come into play when calculating tax liability as well.

The book value of the tangible assets listed on a balance sheet is calculated based on the acquisition cost of an asset, less its accumulated depreciation. 

Tangible Asset Valuation 

The three leading valuation methods for fixed/tangible assets include the cost method, the market value method and the value-based method. 

Under the cost method, the purchase price of the asset is listed as its value. The market value method looks at what the item would bring if it were offered for sale on the open market. The value-based method affixes a value to an asset based upon its capability to generate revenue. This can be a function of the net present value of future cash inflows, or the cash that would be generated by selling it.

Depreciation is another factor in the determination of tangible asset valuation.  After all, wear, tear, and obsolescence can decrease the value of a tangible asset over time. The value of an asset when depreciation is taken into consideration becomes its net value.

Depreciation can be calculated by several different methods. Two of the most common are the straight-line depreciation and declining balance methodologies.

Intangible Asset Valuation

The value of intellectual property can be significant, yet quantification can be challenging.  The three primary methods applied to this task are the market approach, income approach and cost approach.

Under the market approach, comparable prices paid for similar assets are considered. The income approach bases the value of the asset on the present value of its perceived future income. The cost approach is predicated upon an estimate of the cost of developing a similar intangible asset.

Asset Valuation and Alternative Investments

Yieldstreet was founded with the goal of improving access to private markets by making them available to a wider range of investors. 

Yieldstreet’s investment team conducts a thorough analysis of single deals and third-party funds, only selecting a limited number of them for the platform. Our origination process is described in detail here

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

300 Park Avenue 15th Floor, New York, NY 10022


No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and are willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Plaid, and Footprint and none of such entities is affiliated with Yieldstreet. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure