Liquidation value may be more relevant in a troubled economy
Abstract: Most appraisal assignments call for going-concern value — that is, the value of a business as if it will continue to operate profitably into perpetuity. But in a troubled economy, going-concern value might not be as relevant as liquidation value — especially if a business is unprofitable and is having trouble paying off its debt. This article defines liquidation value and explains how valuators can help assess whether it’s relevant, in light of the company’s situation. A sidebar discusses the differences between a forced liquidation and an orderly one.