Liquidation value is the estimated realizable value of a company's assets in a forced or distressed sale — the amount recoverable if the company must sell its assets quickly, at prices below orderly market value. It represents the absolute floor of business valuation: below this value, shareholders prefer to liquidate rather than sell the business as a going concern. Liquidation value is distinct from going concern value (which assumes the business continues to operate and generate cash flows) and from book value (which reflects historical cost minus depreciation).

Two liquidation variants are distinguished: orderly liquidation value (OLV) assumes a reasonable time frame (several months) to market and sell assets under planned conditions — applicable in a voluntary dissolution, a consensual restructuring, or a sursis concordataire in Switzerland. Forced liquidation value (FLV) assumes an immediate, urgent sale with no time for market preparation — applicable in a judicial liquidation (liquidation judiciaire in France, Konkurs in Switzerland) or an asset seizure. The FLV is typically 30–60% below the OLV for specialized industrial assets, reflecting the time-discount of urgency.

In distressed M&A, the liquidation value serves as the buyer's reference price floor in the negotiation: no rational acquirer will pay more for a distressed business than it would recover in a liquidation, unless significant synergies or going-concern premium justify the excess. For lenders and secured creditors, the FLV of pledged assets determines the real economic value of their security package — a critical input in restructuring negotiations.

At Hectelion, we assess orderly and forced liquidation values for distressed acquisitions, bank security and restructuring purposes in our valuation mandates.