Enter the recovery rate and the book value of an asset into the calculator to determine the estimated recovery value (ERV).

ERV Formula

The following formula is used to evaluate the estimated recovery value.

ERV = RR * BV

  • Where ERV is the estimated recovery value
  • RR is the rovery rate (%)
  • BV is the book value ($)

ERV Definition

What is ERV?

ERV, short for estimated recovery value, is a metric used to describe the total amount of value a company could extract from another asset that is undergoing a liquidation event such as a company going bankrupt.

The book value is also considered the net present value of an asset and a recovery rate is a percentage of an asset that can be recovered during the liquidation event.

Example Problem

How to calculate ERV?

  1. First, determine the book value of the asset or company.

    For this example, we will look at a single asset to make the calculation simple. In this case, the book value of the asset is found to be $40,000.00.

  2. Next, determine the recovery rate.

    During a liquidation event, the recovery rate of this asset is expected to be 85% because it can be sold on the open market.

  3. Finally, calculate the estimated recovery value.

    Using the formula above, the ERV is calculated to be:
    ERV = RR * BV
    ERV = .85 * $40,000
    ERV = $35,000.00.