Net Orderly Liquidation Value (NOLV) is the estimated amount that could be recovered by selling a set of assets in an orderly sale, after the costs of liquidation, and it is how a lender decides how much to lend across those assets.
NOLV is usually determined by an independent appraiser and expressed as a dollar amount or as a percentage of the assets' cost or book value. An orderly liquidation assumes the seller has a reasonable amount of time to find buyers, so it typically yields more than a forced or fire-sale liquidation but less than fair market value in a going concern. Expenses of the sale, such as commissions, storage, and carrying costs, are subtracted to reach the net figure.
In asset-based lending, NOLV anchors the borrowing base for collateral such as inventory and equipment: the lender advances a percentage of the appraised NOLV rather than of book value, leaving a cushion in case the borrower defaults. It’s similar to the 📝Assembled Brands Financeable Equation.