Subject Different institutions closely interact in the modern economic system. This helps keeping the balance of interests of economic entities. Appraisal activity plays an important role in protecting the interests of owners and other beneficiaries making various transactions. The main appraisal-related problems are often associated with inconsistency of laws and regulations or guidelines. To solve the problems arising in lending, it is necessary to calculate the liquidation value of the pledged item. When determining the liquidation value, it is required to consider the impact of contingencies forcing the seller to sell the property on the terms other than those exist in the market. Objectives The purpose of the article is to test the hypothesis, which is based on the assumption that the liquidation value is equal to the market value in business valuation. The proposed hypothesis refutes the conventional postulate for all other objects of valuation, according to which the liquidation value is always less than the market value. At the present stage of the Russian appraisal practice development, there are no clear methods for determining the liquidation value of business. This is also true for regulations and guidelines of credit institutions. Methods In the study, I tested the hypothesis under the methods of analysis and synthesis. Results I reviewed the concept of liquidation value in relation to business valuation. I also analyzed the existing methods for liquidation value calculation, and the applicability of these methods to determine the liquidation value of business. The findings prove the equality of the market value and the liquidation value under certain assumptions. This confirms the hypothesis about the correlation of these two variables. Conclusions and Relevance The conclusions of the study may have practical value for pledged items valuation. In addition, the article covers a number of unsolved issues related to improving the appraisal laws.
Keywords: business valuation, liquidation value, appraisal, object
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