Determining liquidation value for a service business

professional profile

August 12, 2024

by a professional in Nashville, TN, USA

Hi there,

I'm supporting a transaction that is a residential service business with $15-20m in annual recurring revenue. The buyer is hoping to claim the customer list (and the associated recurring revenue) as an asset for lending purposes since there isn't much in the way of hard assets.

Is anyone aware of a workout for this situation? For example, having a valuation specialist provide a liquidation value that the bank accepts?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I think you are looking for a loan based on the goodwill value of the business. Even though there is not much in the way of hard business assets, most lenders will lend against the goodwill value of the business, even if in an asset purchase. They would want to see what type of cash flow that business is producing. You could get a business valuation done based on the cash flow that business produces. I would be happy to have a discussion and see if we can assist you. You can reach me here or directly at redacted
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Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA
^redacted‌ have previously commented on Liquidation and might be able to help here.

If anyone else has questions on Liquidation, or related topics, please post them and I'll do my best to get them answered for you.
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