This value perspective is most relevant in the case of insolvency (liabilities exceed assets) or
bankruptcy (unable to meet ongoing financial obligations). Insolvency and bankruptcy typically
occur after one or more periods of accounting or taxable losses and the inability to generate
cash flow from day to day operations.
It is generally equal to:
FMV of Identifiable Tangible Assets LESS Total Liabilities (ST and LT)
Liquidation value can be determined either on a “forced” or a “planned” basis, with the latter
leading to a higher net value due to ability to identify willing and able buyers for company
assets. The Bizequity liquidation value is closer to a “forced” liquidation value.