In this post, we’re continuing our discussion of the three different types of value a certified appraiser will provide before a company auctions off its assets. Read the first two posts here and here. Today, we’ll tackle the topic of forced liquidation value.
Forced liquidation value assumes that a seller is being forced to sell his machinery, equipment, and other assets and wouldn’t be doing so if circumstances weren’t dire. Forced liquidation value is also known as auction value and implies a diminished sales value because of buyers taking advantage of a seller compelled to go to auction. The forced liquidation value of a company’s assets will always be lower than the fair market value.
An appraiser settles on an asset’s forced liquidation value by determining the fair market value and then judging the price for which the goods will most likely sell if there is not enough time to collect an adequate number of bids in an auction.
