登录查看更多内容

What are the common methods and assumptions for liquidation valuation?

由人工智能和领英社区提供技术支持

Liquidation valuation is a method of estimating the value of a company or an asset in the event of insolvency, bankruptcy, or distress. It assumes that the company or the asset is sold quickly and at a discount to its fair market value. Liquidation valuation is often used by creditors, investors, and courts to determine the recovery rate, the liquidation preference, or the fair value of the company or the asset in insolvency proceedings. In this article, we will discuss the common methods and assumptions for liquidation valuation and how they differ from other valuation approaches.

在这篇协作文章中查找专家回答

由社区从 1 条内容中精选。了解更多

1 Orderly Liquidation Value

One method of liquidation valuation is the orderly liquidation value (OLV), which assumes that the company or the asset is sold in an orderly manner within a reasonable period of time, usually 6 to 12 months. The OLV reflects the net proceeds that would be received after paying off the costs of liquidation, such as commissions, fees, taxes, and legal expenses. The OLV is typically higher than the forced liquidation value, which assumes a more urgent and distressed sale, but lower than the fair market value, which assumes a normal market condition and a willing buyer and seller.

添加您的观点

Thomas McCoy

MAI - Appraiser Mccoyvaluation.com, Norfolk, VA
举报内容
A good example of a Liquidation Value would be a lender wanting to know the expected net sales proceeds from a quick sale that would occur in a (user defined) 120-day period vs. a typical exposure period of say 12 months. Market-based sales costs such as commissions and closing costs can also be subtracted if desired by the client.

已翻译

赞

2 Net Asset Value

Another method of liquidation valuation is the net asset value (NAV), which is based on the book value of the company or the asset. The NAV is calculated by subtracting the total liabilities from the total assets of the company or the asset. The NAV assumes that the assets are sold at their book value, which may not reflect their current market value or their liquidation value. The NAV also does not account for the intangible assets, such as goodwill, patents, or brand name, which may have significant value in a going concern scenario, but may be worthless in a liquidation scenario.

添加您的观点

3 Discounted Cash Flow

A third method of liquidation valuation is the discounted cash flow (DCF), which is based on the present value of the future cash flows that the company or the asset can generate before liquidation. The DCF is calculated by projecting the cash flows for a certain period of time, usually 3 to 5 years, and then discounting them by a suitable discount rate, such as the weighted average cost of capital (WACC) or the required rate of return (RRR). The DCF assumes that the company or the asset can continue to operate and generate cash flows until liquidation, which may not be realistic in a distress situation. The DCF also depends on the accuracy of the cash flow projections and the discount rate assumptions, which may be uncertain or subjective.

添加您的观点

4 Liquidation Valuation Assumptions

When performing liquidation valuations, there are certain assumptions that must be made in order to ensure accuracy. These include that the liquidation scenario is known and agreed upon by all parties, the process is efficient and transparent, market conditions are stable, costs are reasonable and predictable, and the valuation date is consistent and relevant. Additionally, it must be ensured that there are no legal, regulatory, or contractual obstacles that may affect the sale or distribution of proceeds, no market manipulation or collusion that may affect the price or demand, and no hidden or contingent liabilities that may arise during or after liquidation.

添加您的观点

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

添加您的观点

Liquidation

+ 关注

给文章评分

我们借助人工智能创建了此文章。您认为这篇文章怎么样？

很棒不太好

举报此文章

查看全部

What are the common methods and assumptions for liquidation valuation?

1

2

3

4

5

1 Orderly Liquidation Value

2 Net Asset Value

3 Discounted Cash Flow

4 Liquidation Valuation Assumptions

5 Here’s what else to consider

Liquidation

给文章评分

感谢您的反馈

更多Liquidation相关文章

更多相关阅读内容