Liquidation Value

Knowledge Center

Summary, forum, best practices, expert tips and information sources.

11 items • 201.527 visits


What is Liquidation Value? Description

Liquidation literally means: turning the assets of a company into readily available cash.

The liquidation value of an asset or company is: the estimated amount of money that it could be sold for quickly. Such as if it were to go bankrupt. In a normal growing profitable industry, a company's liquidation value is usually much less than the current share price. In a dying industry, the liquidation value may exceed the current share price. This usually means that the company should end its business.

Two types of Liquidation Value

There are actually two types of liquidation value, depending on the time available for the liquidation process:

  1. Orderly liquidation value. This assumes that the enterprise can afford to sell its assets to the highest bidder. It assumes an orderly sale process. It assumes that the seller can take a reasonable amount of time to sell each asset in its appropriate season and through channels of sale and distribution that fetch the highest price reasonably available.
  2. Distress liquidation value. This is an 'emergency' price. This assumes that the enterprise must sell all its assets at or near the same time, to one or more purchasers. The assumption is that the typical purchaser for the assets is a dealer who specializes in the liquidation of the entire assets of a company. For obvious reasons, the distress liquidation value will always be lower than the orderly liquidation value.

Depending on the enterprise and the nature of its assets, the difference between the two values can be substantial.

This methodology should only be used if liquidation is likely at the end of the forecast period.

Special Interest Group

Liquidation Value Special Interest Group.

Special Interest Group (9 members)


Forum discussions about Liquidation Value. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.

Start a new topic about Liquidation Value


Best Practices

The best, top-rated topics about Liquidation Value. Here you will find the most valuable ideas and practical suggestions.

Expert Tips

Advanced insights about Liquidation Value. Here you will find professional advices by experts.

Information Sources

Various sources of information regarding Liquidation Value. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

Distressed Firm's Resources: Book Value of Equity and Earnings

Financial distress, Merger, Bankruptcy
Christine E.L. Tan examines the relative valuation importance of book value of equity and net income of financially dist...

Liquidation Triggers and the Valuation of Equity and Debt

Bankruptcy, Liquidation
Many bankruptcy codes implicitly or explicitly contain net-worth covenants, which provide the firm's bondholders with th...

Research Links

Jump to further research sources regarding Liquidation Value.








Return to Management Hub: Decision-making & Valuation  |  Finance & Investing

More Management Methods, Models and Theory

Special Interest Group

Do you know a lot about Liquidation Value? Become our SIG Leader and gain worldwide recognition as an expert.

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2023 12manage - The Executive Fast Track. V16.1 - Last updated: 5-6-2023. All names ™ of their owners.