The definitions for Orderly Liquidation Values (OLV) and Forced Liquidation Values (FLV) are similar but with one of the differences being the time period permitted for the sale of the assets. Orderly liquidation allows businesses to sell assets over a reasonable amount of time and for reasonable prices, whereas in a forced liquidation, assets must be sold in the shortest time possible and for whatever price they bring.
Also in orderly liquidations, the seller has more control over the process, which is different from that of forced liquidations. Under forced liquidations, sellers do not control the process but rather a bank or other financial institution is generally the one in charge. The assumption in orderly liquidations is that a company can afford to negotiate the selling price of their assets with potential buyers and sell to the highest bidder. Additionally when a company is given reasonable time to liquidate, assets can be sold at the most appropriate time and be offered to the widest audience. Thereby, they typically sell for higher prices than in forced liquidations.
Conversely in forced liquidations, potential buyers are aware of the speed in which the sale must be conducted and go in expecting to get a real bargain from a seller who is compelled to sell. This is why FLV are generally much lower than OLV.
Businesses facing orderly liquidation or forced liquidation can hire a firm that specializes in asset recovery and disposition services to manage the entire project and help to obtain maximum value for the company’s assets. Since asset appraisal is the essential starting point when facing liquidation, you want the most experienced appraisers such as our team at Rabin. We provide businesses with fair market values for their assets as well as give them the OLV or FLV that is based on our actual sales or that in the marketplace.
Sources:
nebbinstitute.wordpress.com/2014/06/11/the-difference-between-orderly-liquidation-forced-liquidation-and-fair-market-values/
Rabin Worldwide is an international company that specializes in creating liquidity for manufacturing facilities with idle or marginally productive assets. Rabin’s operations include selling entire plants or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency. Please contact us to discover how we may assist with your asset liquidation process.
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