How to value Distressed Company ?

🧩 What Is Distress Valuation?

A method to estimate the worth of a company facing financial hardship, insolvency, or restructuring.

It's not about future potential — it's about current salvage value.

🧩 Recent Valuation of Distressed Companies

WeWork: $9B (market-based)

Rite Aid: $575M (asset sale)

Yellow Corp: $2.4B (liquidation)

🔄 What Changes in Approach?

Traditional Valuation	Distress Valuation
Future Cash Flows	Immediate Recovery Value
Market Comparables	Forced-sale Discounts
Going Concern Assumption	Liquidation / re-orf basis
Optimism in assumptions	Conservative & risk-adjusted

🧠 Key Methods Used:

Liquidation Value: What assets fetch in a forced sale

Adjusted Net Asset Value: Assets minus real liabilities

Break-up Value: Valuing the business in parts, not as a whole

Order of Recovery: Who gets paid first — lenders, employees, etc.

It Matters:

✅ Helps investors spot turnaround opportunities

✅ Enables creditors to assess recoveries

✅ Crucial for buyers acquiring under stress

✅ Supports legal proceedings like bankruptcy, NCLT, or CIRP

Real Talk:

"In distress, valuation isn't about pricing dreams — it's about pricing damage control."

🎯 Use this when:

The company has defaulted or is nearing default Business operations are suspended or minimal There's legal action, restructuring, or insolvency filing You're considering a distress acquisition or debt resolution

🔍 Valuing distressed assets isn't just finance — it's forensic strategy.

Comment 💬 if you've dealt with distressed deals. DM us if you need help valuing one