The procedure for calculating the liquidation value of discontinued operations corresponds to the value of all assets at market prices less expenses for marketing. Assets primarily include machinery and equipment, inventories, but also intangible assets such as patents, contracts and other rights, as well as investments and real estate. If the business employs staff, the cost of releasing the staff must also be deducted from the asset value. Finally, liabilities must be deducted.
The resulting liquidation value can be used as a reference value to consider whether it makes sense to continue a non-profitable business, sell it or shut it down. A sale only makes sense for shareholders if the expected proceeds from the sale are higher than the liquidation value. In this respect, in addition to the liquidation value, the value of the continuing business should also be determined, for example using the capitalized earnings valuation method or using the discounted cash flow method.