Going Concern as a variable: Sector-calibrated survival multipliers for Goodwill Valuation in mergers and acquisitions

This paper introduces the Business Survival Value Multiplier (BSVM), a sector-calibrated correction factor for goodwill and intangible asset valuation in mergers and acquisitions. The core argument is that the Gordon Growth Model — universally applied in DCF-based valuations — was designed for diversified portfolio assessment, where firm mortality risk diversifies away. When applied to individual M&A transactions, this assumption concentrates 100% of survival risk in the discount rate without explicit adjustment, producing a systematic overvaluation bias. The BSVM corrects this structural error by incorporating empirical sector survival probabilities via Weibull survival analysis, calibrated from 27 establishment cohorts (1994–2024) across 19 NAICS 2-digit sectors using BLS Business Employment Dynamics data. The average Gordon overvaluation bias is estimated at 32.7% across all industries, ranging from 25.4% (Utilities) to 35.9% (Transportation & Warehousing). The framework produces a probabilistic output — absolute VaR, percentage VaR, and 95% confidence interval from 1,000,000+ Monte Carlo iterations — compatible with Level 3 fair value measurement under IFRS 13 / ASC 820 and Basel III prudential requirements for IP-backed finance.