If the company hasn’t been cash flow positive over its lifetime, it is unlikely that the assets will be worth more than the debts.
Investments in machinery almost invariably depreciate significantly the moment they are bought, and salaries paid to personnel, electricity to power the lights in your office building, money spent on legal, etc, all lead to zero assets.
It can happen if most of the assets are products the company made, and the company can produce them below market value, but then, why would it have have products in store, and not sell them?
There are exceptions, but they’re easily recognized. On the one hand there’s seasonal demand: companies growing Christmas trees, or producing umbrellas, hockey skates, etc.
On the other hand, there’s companies with long production times such as whiskey distillers or factories building nuclear plants.
Well, this is why it makes a lot more sense for startups to raise equity versus debt typically. There could be some exceptions such as using the debt to buy required hard assets, but typically, it makes very little sense.
Investments in machinery almost invariably depreciate significantly the moment they are bought, and salaries paid to personnel, electricity to power the lights in your office building, money spent on legal, etc, all lead to zero assets.
It can happen if most of the assets are products the company made, and the company can produce them below market value, but then, why would it have have products in store, and not sell them?
There are exceptions, but they’re easily recognized. On the one hand there’s seasonal demand: companies growing Christmas trees, or producing umbrellas, hockey skates, etc.
On the other hand, there’s companies with long production times such as whiskey distillers or factories building nuclear plants.