Valuation of distressed companies is more complex than valuing healthy companies due to assumptions of going concern being invalid. Traditional valuation methods like discounted cash flow analysis and relative valuation assume a going concern basis and may provide over optimistic valuations. Additional modifications are required and options include using probabilistic inputs in DCF, valuing without debt impact and adjusting, normal valuation adjusted for probability of default, and simulation techniques, though these are complex. Relative valuation of distressed companies also requires subjective analysis by considering available data on comparable distressed companies.