Define: Liquidation Value

Business, Legal & Accounting Glossary

Definition: Liquidation Value



What is the dictionary definition of Liquidation Value?

Dictionary Definition


  • The worth of an asset at the time of liquidation
  • The cash value of an asset at the time of selling

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Full Definition of Liquidation Value


The liquidation value of a company is an estimate of the value of a company’s assets if all assets were sold for cash. There are two types of liquidation value. Distressed liquidation value is the “fire sale” scenario, when all assets are sold with urgency nearly simultaneously, perhaps to dealers who specialize in selling assets in a more ordered manner. In contrast, ordered liquidation value is the value expected from proceeds of patiently selling each asset according to timing and approach that are best for that asset. Ordered liquidation value is generally much more than distressed liquidation value. Public companies in collapsing industries and other seriously underperforming entities sometimes have a liquidation value exceeding market capitalization. In such cases, the right solution is to sell the company’s assets and give the shareholders the liquidation proceeds. One well-known risk arbitrage strategy based upon liquidation value is to buy such shares and wait for the sale of proceeds.


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https://payrollheaven.com/define/liquidation-value/
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Liquidation Value. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 06, 2020 https://payrollheaven.com/define/liquidation-value/.
Chicago Manual of Style (CMS):
Liquidation Value. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/liquidation-value/ (accessed: April 06, 2020).
American Psychological Association (APA):
Liquidation Value. PayrollHeaven.com. Retrieved April 06, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/liquidation-value/

Definition Sources


Definitions for Liquidation Value are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 10th February, 2020