The Liquidation Value Method estimates what a company's owners would receive if the business stopped operating, its assets were sold separately and its liabilities were settled. It sets a floor value and is central to insolvency, restructuring and credit decisions.
When to Use the Liquidation Value Method
- Insolvency, receivership and winding-up proceedings
- Debt restructuring and creditor negotiations: comparing recoveries in liquidation with those under a restructuring plan
- Lending and collateral assessment for banks and private credit funds
- Going-concern doubt: when a business earns less than its cost of capital and may be worth more broken up
- Litigation and dispute resolution involving distressed entities
Forced vs Orderly Liquidation
- Orderly liquidation value (OLV): assets are sold over a reasonable marketing period to obtain the best prices.
- Forced liquidation value (FLV): assets are sold quickly, often at auction, with deeper discounts.
How the Method Works
- Inventory the assets: cash, receivables, inventory, property, plant and equipment, investments and any saleable intangibles.
- Estimate the net realisable value of each asset class, applying recovery rates supported by appraisals and market evidence.
- Deduct liquidation costs: agents' and legal fees, employee termination costs, holding costs and taxes.
- Settle the liabilities by priority: secured creditors, preferential claims, unsecured creditors, then equity.
- Calculate the net proceeds to equity, and test optimistic and conservative recovery scenarios.
Trusted by Public and Private Companies and Multinational Corporations
Valtech Valuation is an independent valuation and transaction advisory firm with offices in Hong Kong and Singapore. Public companies, private businesses and multinational corporations rely on our valuations for financial reporting, transactions, fundraising and disputes. Our clients range from Fortune 500 companies, listed groups and US-listed firms to private equity funds, family offices and high-growth startups, across Hong Kong, Mainland China, Singapore, Southeast Asia, the Middle East and the United States.
Why Appoint Valtech Valuation for Reliable International Valuation Services
- Independent and defensible conclusions: objective reports prepared to withstand scrutiny from courts, creditors and regulators.
- ISO 9001 certified quality management: a certified quality process for consistent, reliable results.
- Proven with listed and multinational clients: experience supporting publicly listed groups, US-listed firms and Fortune 500 companies.
- International reach, local expertise: offices in Hong Kong and Singapore serving clients across Asia, the Middle East and the United States.
- Asset and business valuation under one roof: Chartered Valuation Surveyors and business valuers work together on recovery analysis.
- Multi-disciplinary qualified team: accounting, finance, risk management, surveying and business valuation professionals on every engagement.
Professional Credentials of Valtech's Team
- PhD holders
- Certified Public Accountants – CPA (HKICPA)
- Chartered Financial Analysts – CFA
- Financial Risk Managers – FRM (GARP)
- Chartered Valuation Surveyors – MRICS (Royal Institution of Chartered Surveyors)
- Accredited in Business Valuation – ABV (AICPA)
- Certified Valuation Analysts – CVA (Singapore)
- Certified Public Valuers – CPV (China Appraisal Society)
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