How to Monetize an Asset

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Monetize an asset by maximizing its productivity.
Monetize an asset by maximizing its productivity. (Image: Thinkstock/Comstock/Getty Images)

Assets are valuable goods or securities that can be monetized by selling them for cash or increasing productivity. Assets either appreciate or depreciate in value over time. If selling is the strategy, it's essential to manage the asset in such a way that it brings the highest price possible, at the most opportune time. For a business asset, increase productivity by cutting costs or growing revenues.

Examine your asset and determine its productive use and your need to retain it. For example, if the asset is a home or a machine used in manufacturing, determine how many more years it can be used well before upgrading it with renovations or scrapping it. If the asset is a security, such as a stock or a bond, there is no physical examination possible. For a business, examine the key operating metrics and determine where there is opportunity for changes.

Calculate the current value of the asset based on its cash flow. Use the net present value formula. For unproductive assets such as an owner-occupied home or a stock that does not pay dividends, this method should not be used. For a business, this method can be used to determine a value but you may choose to operate more efficiently first, and thereby monetize your asset by squeezing more yield out of it prior to turning it over.

Present Value = Sum of (Cash Flow Year 1/(1+R)^N + Cash Flow Year 2 . . .

R is the discount rate and N is the year.

The discount value is found by examining comparable assets and using their discount rate. These are found using purchased investment reports or analysis.

Apply a number of strategies to better operate a business asset and produce more cash. Put idle assets into service by swapping resources with business partners. For example, a printing plant at a newspaper can print papers for other communities. Find alternative or additional streams of income. Numerous industries maintain cooperatives, where members make some of their heavy equipment or other costly assets available for rental by others. Operate at capacity and outsource any work that requires an asset base that will not be operated at capacity. The assets that you retain should be monetized fully.

Use the present value of the cash flows to determine the value at which you can monetize your asset. If you have changed your business plan, use the newly assumed cash flows based on business adjustments. For stocks, bonds or homes, use the present market value found on the exchange or found by looking at comparable assets.

Find a broker who can sell your asset if it is not listed on an exchange. For most valuable items, there are specialized broker services that can be found online or in your community to help you sell assets. Such brokers likely will take a cut of the sale in return. Real estate brokers are the most widely known. They use their network and the multi-listing system, which is used to publicize and sell homes.

Sell other exchange-based assets by going to your online brokerage firm or calling your broker and requesting immediate liquidation. The asset should be sellable almost instantaneously for the market value. Businesses can eventually make an initial public offering to sell a large percentage of the company if the total assets are large enough.

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