How do you run a liquidation analysis for a middle-market target?

Step by step:

• Asset side: extract book values from the balance sheet and apply liquidation discounts. Inventory: 30–50% discount (perishable/specialized goods more). Receivables: 10–20% discount (bad debt + fast-sale pressure). Property, plant & equipment (PP&E): 30–60% discount; real estate often only a 10–20% discount. Intangibles/goodwill: typically a 100% discount (no liquidation value).
• Liability side: a complete list of debts, including pension provisions and restructuring costs (severance/social-plan costs, commonly 1–2 months' salary per employee per year of service). Lease-termination costs.
• Insolvency proceeding costs: 5–10% of asset proceeds (administrator, lawyers, court fees).
• Result: net liquidation value = asset proceeds − liabilities − insolvency costs.