Q&A: Valuing Distressed Assets

FW: Is it rare to see valuations in today’s market meet the expectations of buyers and sellers? How wide is the gap? How would you characterise general valuation trends overall?

Burton: A key role of the valuer is managing expectations – and those expectations will vary based on the client and the specific case. When distressed assets are being valued for restructuring professionals, there is typically a general awareness of the market in which distressed assets trade. A properly researched valuation is seen as a valuable tool by these professionals and will usually be relied upon.When the valuation firm properly sets expectations and explains all the factors that went into the conclusion, buyers and sellers better understand the value. It’s important for parties to understand that many buyers have a psychological predisposition to expect a bargain because it is a distressed asset. Typically, the gap is not so big that it cannot be bridged with transparency and a partnership approach, which a trusted vendor will offer its client. In terms of other trends, there can be seasonality to the market which can ebb and flow with buyer and client budgeting.

(Excerpt from Q & A with Tom Burton of Liquidity Services)

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