Orderly Liquidation Value

Last updated: March 22, 2024

What Does Orderly Liquidation Value Mean?

The orderly liquidation value (OLV) is typically included in an appraisal of hard tangible assets (i.e., equipment). It is an estimate of the gross amount that the tangible assets would fetch in an auction-style liquidation with the seller needing to sell the assets on an “as-is, where-is” basis. The term “orderly” implies that the liquidation would allow for a reasonable time to identify all available buyers, and the seller would have control of the sale process. This is different than a forced liquidation where the first available buyer is used and the seller does not have control of the sale process (typically the bank does).


Divestopedia Explains Orderly Liquidation Value

Buyers will often engage an appraiser to provide an opinion on the value of tangible assets acquired. They do this to justify the net tangible asset backing for the purchase price and hopefully reduce the amount of goodwill being paid. Appraisers will provide two values: a) the fair value and b) the orderly liquidation value along with the estimated useful life of the assets.

The fair value provided is the one that buyers use to support their purchase price and also for financing purposes. It is higher than the OLV because it assumes that a transaction would occur willingly between the buyer and seller, without the seller being obligated to transact. It also assumes that sufficient (rather than reasonable) time would be allowed to find all buyers available.


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