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Understanding the Liquidation Value of Your Assets and How to Maximize the Results

October 20, 2021

If you think that your company will benefit by undergoing a business liquidation, then it’s prudent to know how to calculate the value of your assets. Your first step is to find an Appraisal and Auction firm that specializes in selling similar machinery and equipment. Liquidation/Appraisal firms that are active buyers and sellers and not just Appraisers are active in the market and can best provide accurate values as well as proposed solutions to best achieve these results.

Here’s how you can calculate the business liquidation value of your asset

The Appraisal

The first step to calculating the liquidation value is to understand your requirements and timelines - are you looking for a quick sale typically between 45-90 days (Liquidation/Auction Value) or do you have the luxury of the extended time of 90 – 150 days (Order Liquidation Value)? Extended exposure to the market will generally yield higher returns however there may be extra costs associated with this timeline (rent, etc.).

Liquidation and/or Auction Approach

Once you have decided your needs and timelines, you can then explore the options that best suit your business needs.

Alternate Appraisal Valuation Concepts

Depending on your requirements there are multiple Appraisal concepts that can provide a significant contrast of values.  These include:

Market Value (Fair Market Value)

A professional opinion of the estimated most probable price expressed in terms of currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell and both parties fully aware of all relevant facts as of the effective date of this appraisal report.

Market Value - In Place

Same as Market value and adding “installed costs for intended utilization”.

Desktop Opinion (Based solely on provided information)

A professional opinion of the appropriately defined value expressed in terms of currency to be realized by the sale of assets, in which the opinion is generated from lists and/or other informational materials supplied to the appraiser and evaluated without the benefit of an actual on-site inspection. 

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