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Liquidation Value

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:

Liquidation Value:

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.

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