According
to the some of the prominent small business administration, the reasons small
and mid-tier businesses don’t grow as anticipated is due to the fact that they
lack capital as well as the correct experience required to successfully run a
business. Some of the once potentially capable companies exit the competition
and finally the companies shut down. Some players feel obliged to file for
bankruptcy when their debts exceed the available assets. Although it may sound
counter-intuitive, your bankruptcy has some value added to it. There are
several ways for business
bankruptcy valuation. Some of them are mentioned below.
- Valuation Purpose
One big
reason to value your business during bankruptcy is to assess how much is
actually available to your company's secured and unsecured creditors. If your
company is continuing its operation, you will be required to know how much can
be leveraged (converted to cash) to fund your business operations in and after
bankruptcy.
- Liquidation Value
This is
the minimum amount your company will get for the liquidation or quick sale of
its assets. Either an auction firm will provide a value depending on what the
assets can fetch if sold or a bulk asset purchaser will provide the value based
on the asset’s worth.
- Cash-Flow
Cash-flow
based valuation methods can give a detailed and precise valuation of the
company. A valuation may use a multiple of earnings before interest, taxes,
depreciation, EBITDA and amortization that suits your current business
situation.
Consider
these options and make use of a business valuation service.
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