08 Aug Liquidation Value Method: When To Use When Valuing a Company
Consider using the Liquidation Value Method (as opposed to the Net Asset Value Method) when valuing a company if the:
- The liquidation value is an appropriate definition of value 10/’ the company being valued.
- The ownership interest being valued is either has a controlling interest or has the ability to cause the sale of the company’s assets.
- The company is in bankruptcy or there Is substantial doubt about the company’s ability to continue as a going concern.
- The company’s current and projected cash flows from continuing operations are low compared to its net assets.
- The company may be worth more “dead” than “alive.”