Liquidation Value

Liquidation value refers to the estimated amount that would be received from selling a company’s assets if the company were to be liquidated. This value is typically lower than the market value of the assets, as liquidation often requires a quick sale, which can result in discounts.Liquidation value is often used in bankruptcy proceedings or when valuing distressed companies. It helps determine the proceeds available to creditors and shareholders after the sale of assets.

Example

A distressed manufacturing company is estimated to have a liquidation value of $5 million, which is the amount that could be raised from selling its equipment, real estate, and inventory under liquidation conditions.