A hedge fund client held a convertible note in a company that restructured its outstanding debt. As part of the restructure, the convertible note was exchanged for two separate Term Loans, one a straight debt instrument with a quarterly cash coupon and the other a convertible debt instrument with a restructured conversion price. The client required a fair value analysis for the two holdings as of its quarter-end reporting period
VRC plays an ongoing role in assisting this asset manager with its quarterly marks for financial reporting purposes. VRC previously analyzed the convertible note and now analyzes the two loans received upon restructuring. The straight debt loan was valued on a yield analysis considering a risk-adjusted discount rate and the expected future cash flows under the loan. An issuer call feature was considered in the context of expected cash flows. Primarily the analysis incorporated the new capital structure and market yields relevant to the seniority, maturity and various rights available to the issuer and holder. The convertible loan analysis involved a yield analysis, as well as an option analysis. The option analysis involved a Monte Carlo numerical analysis to incorporate the soft call available to the issuer that acts as a barrier and caps the option value. The magnitude of the option value indicates how much of a hybrid security the loan is at any point in time and helps determine an appropriate valuation approach.
Financial Sponsor: Hedge Fund Services
Allocation of Purchase Price
Under ASC 805, a PPA analysis allocates the purchase price into acquired assets and liabilities
Alternative Asset Valuations
Complex Securities & Portfolio Valuation Services for Illiquid, Hard-to-Value Securities
Valuations for complex instruments such as options, warrants, convertible bonds, contingent consideration, preferred & common stock
Financial Reporting Valuations
Valuations to make confident decisions & support evolving financial reporting standards
U.S. domestic & global tax laws require valuation experts who understand the intricacies of tax reporting
Annual impairment testing services supporting ASC 350 compliance, including underlying assets associated with reporting units
International Business Combinations
Multinational firms pursuing M&A strategies face additional international financial & tax reporting requirements
IPO Readiness & Equity Compensation
Companies need valuations for various forms of equity-based compensation. Early-stage companies need a valuation health-check, pre-IPO
Mergers & Acquisitions
ASC 805 & ASC 350 make it critical for buyers & sellers to consider how a transaction impacts financial reporting
Valuations for all types of hard-to-value illiquid or non-marketable securities including level 3 securities, loans, bonds, equity & structured products
A leading commercial agribusiness client in Argentina was interested in selling their company, which was focused on cultivating and producing olive oil, table olives and wines.
An industrial property consisting of various manufacturing machinery & equipment was a candidate for an ad valorem tax reduction.
A client who designs, engineers, and manufactures value-added products and systems for automotive and light-vehicle manufacturers acquired an automotive components manufacturer.
Brands: Food & Beverage
A leading manufacturer of branded food products engaged VRC to estimate the fair value of certain intangible assets acquired in a business combination.
We were retained by an energy production company whose subsidiary acquired distressed energy assets from an energy & production company. In selecting a valuation methodology, we needed to consider the significant divergence in the enterprise value of the business versus the un-discounted value of the assets given the dramatic drop in commodity prices at the time.
A brand valuation that estimated the fair value of intangible assets acquired in a business combination was needed by a personal care product company for the sale of its branded and private label products.
A leading international producer of nitrogen products acquires a nitrogen manufacturing company requiring a valuation for allocation of purchase price according to ASC 805.
Oil & Gas
VRC provided a required valuation of tangible and intangible assets for a Master Limited Partnership (MLP) client in support of a purchase price allocation. There were no detailed fixed asset records; VRC needed to overcome significant data limitations.
In order to comply with Accounting Standards Codification 815 (ASC 815), an early stage pharmaceutical company asked VRC to analyze the entire convertible callable note and determine the fair market value of each of the embedded derivatives.
A private equity sponsored cloud based provider of manager content, enterprise lending services granted certain management incentive units to participating executives, as compensation to incentivize management performance.
A PE-sponsored cloud based provider granted equity compensation incentives to executives. To comply with financial reporting requirements of Accounting Standards Codification 718 (ASC 718), the provider engaged VRC to determine the fair value of the issued units.
A large multinational consumer products company acquired a South American company operating in the same space. VRC was engaged to estimate the value of the PP&E and intangible assets for financial reporting purposes.
Financial Sponsor: Hedge Fund
A shareholder of a closely-held hedge fund was not receiving the appropriate level of compensation per agreement with the controlling interest shareholder.
Financial Sponsor: Private Equity
A technology company was purchased by large private equity investor. With the purchase price set, the new entity was capitalized with debt and three different types of equity securities.
Property taxes were levied on only real property portion of a hospital, key to analysis was separating the value of the business ops from that of real property.
We were retained by a leading provider of wireless messaging and information services to provide various valuation services for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
VRC was asked by the attorneys representing the seller to provide multiple common stock valuations on a retrospective basis that would withstand a Big 4 audit review under tight deal closing deadlines.