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:

  1. The liquidation value is an appropriate definition of value 10/’ the company being valued.
  2. The ownership interest being valued is either has a controlling interest or has the ability to cause the sale of the company’s assets.
  3. The company is in bankruptcy or there Is substantial doubt about the company’s ability to continue as a going concern.
  4. The company’s current and projected cash flows from continuing operations are low compared to its net assets.
  5. The company may be worth more “dead” than “alive.”
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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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