What is Net Orderly Liquidation Value (NOLV)?
NOLV stands for Net Orderly Liquidation Value: Orderly Liquidation Value (OLV) minus the costs of sale. OLV is the gross price of an orderly, time-limited sale. NOLV is what remains after commissions, removal, rigging and freight come out. Asset-based lenders size equipment borrowing bases on it.
Lukes & Lukes is an independent machinery and equipment appraisal firm, and NOLV is one of the premises we report for lenders nationwide.
By Jared Lukes · CEO & lead appraiserUpdated
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What does NOLV stand for, and what does it mean in finance?
NOLV stands for Net Orderly Liquidation Value, the net proceeds from selling assets in an orderly liquidation after the costs of the sale are paid. In lending and finance it is the recovery figure: what the bank would collect if it had to sell the collateral. The OCC's Comptroller's Handbook on asset-based lending defines it as "the estimated value a business would receive if assets were liquidated in an orderly manner over a reasonable period, generally six to nine months."
The "orderly" part assumes a seller who is compelled to sell but has time to market the assets through dealers, brokers or auction. The "net" part subtracts what it costs to run that sale. A press can bring a respectable gross price at auction and still carry rigging, disconnection and freight costs that take a meaningful share of it. OLV is what the market pays. NOLV is what the lender collects.
What does the "net" in NOLV deduct?
The net in NOLV deducts every cost of turning the equipment into cash. The deductions vary by asset, by site and by how the sale is run. A lender should expect a NOLV report to address each category:
- Sale commissions and auctioneer fees: what the selling agent takes off the top
- Removal, rigging and disconnection: getting the asset out of the building without damaging it or the building
- Freight and transport: moving equipment to the buyer or to a sale site
- Site restoration: capping utilities, patching floors and leaving a leased space in the condition the lease requires
- Marketing and cataloging: photographing, listing and advertising the assets to a real buyer pool
- Storage, insurance and security during the sale period, when the assets still have to be kept somewhere
The support should trace asset by asset, or at minimum category by category, with the assumptions stated. A NOLV with no visible deductions cannot be checked by loan review.
How does an appraiser calculate NOLV?
An appraiser calculates NOLV by estimating Orderly Liquidation Value and then subtracting the costs of liquidation: NOLV = OLV − costs of sale. In practice the work runs in four steps.
- Identify and inspect the assets. Serial numbers verified, condition and hours read on site, installation noted (freestanding, anchored, plumbed, wired into a line).
- Estimate OLV. Each asset is valued from wholesale, dealer and auction evidence for comparable equipment, under a stated sale period and a compelled seller.
- Estimate the costs of sale. Commissions, removal and rigging, freight, site restoration, marketing and holding costs, by asset or by category.
- Subtract and state the assumptions. Sale period, sale method, whether assets sell in place or are moved, and who bears removal.
What is an example of a NOLV calculation?
Take a plant whose equipment has an OLV of $1,000,000 and subtract each category of sale cost. The figures below are illustrative, not market data.
| Line | Illustrative amount |
|---|---|
| Orderly Liquidation Value (OLV) | $1,000,000 |
| Less sale commissions and auctioneer fees (10%) | −$100,000 |
| Less removal, rigging and disconnection | −$60,000 |
| Less freight and transport | −$25,000 |
| Less site restoration | −$15,000 |
| Less marketing, storage and insurance | −$20,000 |
| Net Orderly Liquidation Value (NOLV) | $780,000 |
Here NOLV is 78% of OLV. A lender that advances 80% against NOLV, which is an illustrative rate set by the lender and not by the appraiser, would lend up to $624,000 on this collateral.
What makes the gap between OLV and NOLV wider?
The gap between OLV and NOLV widens as equipment gets heavier, more installed and harder to move. Light, freestanding equipment that a buyer can fork onto a truck, such as a CNC lathe or a standalone food processing machine, carries a commission, basic rigging and outbound freight. Heavy or installed equipment, such as a large-format press bolted to a reinforced floor or an MRI scanner in a shielded suite, adds specialized rigging, de-installation, crating, climate-controlled freight and sometimes environmental remediation.
Other drivers: a thin buyer pool that lengthens the sale period and the holding costs, a lease that requires the space restored, and a site with limited access for cranes or trucks.
When does a lender ask for NOLV instead of OLV or FLV?
A lender asks for NOLV when it is sizing an asset-based borrowing base, where the advance rate is set as a percentage of net recovery. The OCC handbook states that ABL collateral appraisals "should provide a NOLV as the standard for collateral valuation, not cost or retail value," and that updated appraisals should be obtained throughout the life of the loan. Lenders in an ongoing relationship often refresh the NOLV at renewal or annual review.
- NOLV: asset-based lines and borrowing bases, where the bank needs the net it would collect.
- OLV: collateral files where the program or policy is written against gross orderly proceeds. SBA's SOP 50 10 values used machinery and equipment against net book value or an orderly liquidation appraisal.
- Forced Liquidation Value (FLV): workouts, trustees and downside cases, where the assumption is a compressed, single-event auction.
- Fair Market Value (FMV): not a collateral premise. It fits a sale, an acquisition, or a tax or estate filing, where neither side is compelled.
For the lending choice between FMV and OLV, see which value the bank wants.
How does NOLV compare to FMV, OLV and FLV?
NOLV sits below both FMV and OLV. FMV assumes a willing buyer and a willing seller with adequate time and no compulsion. OLV assumes compulsion and a limited sale period. NOLV takes OLV down by the costs of sale. FLV assumes a compressed, often single-event sale and is usually the most conservative gross figure.
| Premise | Sale it assumes | Gross or net | Who usually asks |
|---|---|---|---|
| Fair Market Value (FMV) | Willing buyer and seller, no compulsion, adequate time | Gross | Buyers, sellers, tax and estate advisors |
| Orderly Liquidation Value (OLV) | Compelled seller, limited but reasonable sale period | Gross | Secured lenders, SBA files |
| Net Orderly Liquidation Value (NOLV) | The OLV sale, less the costs of sale | Net | Asset-based lenders, borrowing bases |
| Forced Liquidation Value (FLV) | Compressed sale, usually a single auction | Gross | Workouts, trustees, receivers |
The same equipment carries every one of these values at the same time. For the full set side by side, see our explainer on FMV, OLV, FLV and NOLV.
What makes a NOLV appraisal defensible?
A defensible NOLV rests on three things, and examiners test all of them. First, the report states the premise and why it fits the assignment. Second, the equipment was observed, with serial numbers verified and condition read on site rather than inferred from a depreciation schedule. Third, the appraiser is independent: the OCC handbook says NOLV "should be established by a competent party who is independent of the credit transaction."
Our reports are USPAP-compliant and prepared by a NEBB-certified Machinery & Equipment Appraiser (CMEA), with a narrative, an itemized appendix and photographs, so loan review and an examiner can trace a NOLV conclusion back to the assets it came from. We can carry FMV and NOLV side by side in the same report. More on how we support lenders and credit teams.
Common questions
Answers, up front.
What does NOLV stand for?
Net Orderly Liquidation Value. It is the Orderly Liquidation Value of the assets, meaning the gross proceeds from a compelled sale over a limited but reasonable period, minus the costs of conducting that sale. The result is the net amount a lender could expect to recover.
What is the difference between OLV and NOLV?
OLV is gross, NOLV is net. OLV states what the equipment would bring in an orderly liquidation. NOLV subtracts the costs of selling, including commissions, removal and rigging, freight, site restoration, marketing and storage, to show what is actually left for the lender.
Why do asset-based lenders use NOLV?
Because they are underwriting recovery rather than performance. Advance rates on equipment lines are commonly set as a percentage of NOLV, since NOLV already accounts for a compelled sale on someone else's timeline and for the expenses that come out before any money reaches the bank. A gross or retail figure would overstate what the collateral can support.
Is NOLV always lower than Fair Market Value?
In practice, yes. FMV assumes an unpressured, fully marketed sale, while NOLV assumes compulsion, a limited sale period and a wholesale channel, then deducts the costs of sale on top of that. How much lower depends on the asset class, how the equipment is installed and what it costs to remove.
How often should a NOLV appraisal be updated?
It depends on the credit and the volatility of the asset class, so confirm the requirement with your lender or program. Because borrowing bases get redetermined and used-equipment markets move, lenders in an ongoing relationship commonly refresh the valuation at renewal or annual review rather than relying on an aging figure.
What does NOLV mean in finance?
In finance, NOLV means Net Orderly Liquidation Value: the net cash that would remain after selling equipment in an orderly, time-limited liquidation and subtracting the costs of sale. Asset-based lenders use NOLV to size equipment borrowing bases. It already deducts commissions, rigging, freight and site restoration from the sale proceeds.
How is NOLV calculated?
NOLV = OLV − costs of sale. The appraiser estimates Orderly Liquidation Value for each asset, then subtracts commissions, removal and rigging, freight, site restoration, marketing and storage. On an illustrative OLV of $1,000,000 with $220,000 of sale costs, NOLV is $780,000.
Is NOLV used in SBA lending?
SBA's SOP 50 10 is written against orderly liquidation value, not NOLV: used machinery and equipment is valued against net book value or an orderly liquidation appraisal, net of prior liens, and a value above net book value requires an independent appraisal. Some SBA lenders also ask for NOLV for their own credit analysis, so confirm which premise the file needs before ordering. More on SBA equipment appraisals.