Methods of Business Valuation: Liquidation Value

The company value forms the foundation for the sales price negotiations during the sale of a company. In addition to the discounted cash flow method and the earnings value method, the liquidation value offers another way to determine the value of a company. In this post, we will show you how it is composed.

Liquidation Value

The liquidation value of a company corresponds to the sum of the individual company components on a chosen reference date. The individual assets such as real estate, machinery, inventory stocks, etc. are evaluated with realistic market prices. From this, debts and mandatory provisions of the company as well as liquidation costs are deducted. Since the liquidation value corresponds to the lower value limit of a company, it should only be considered if it is below the values of other valuation methods, because then continuing the company no longer makes sense.

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