A private equity sponsored cloud based provider of manager content, enterprise lending services (including product eligibility and pricing, secondary marketing, consumer engagement, data and analytics and compliance services) granted certain management incentive units to participating executives, as compensation to incentivize management performance. As a result of the grant, the capital structure of the provider consists of growth debt obligations (1st and 2nd liens) and equity infusions (Class A, Class B, Class C, Class D, Class E and Class E options). Each class of stock has its own specific terms, preferences, and rights. In order to comply with the financial reporting requirements of ASC 718, the provider engaged VRC to determine the fair value of the issued units (Class D stock and Class E options).
Our analysis involved first establishing the aggregate equity value of the provider by employing the backsolve method on the recent equity investment (assumed to be reasonable indication of the aggregate equity value). The backsolve method utilizes the rights and preferences of each security and their ability to participate in the distribution cash flow at the time of an exit or other liquidity event.
Given the complexity of the capital structure (different tranches of debt and various classes of stock), a Monte Carlo Simulation analysis was applied to allocate the concluded aggregate equity value to all the units in the capital structure. The resulting allocated values represent the fair value of the units.
VRC’s Monte Carlo Simulation analysis considers the specific rights and preferences of the various securities, and at what price / value the respective security would participate in the overall value of the provider.
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
Companies need valuations for various forms of equity-based compensation. Early-stage companies need a valuation health-check, pre-IPO
Financial Reporting Valuations
Valuations to make confident decisions & support evolving financial reporting standards
Annual impairment testing services supporting ASC 350 compliance, including underlying assets associated with reporting units
Intellectual Property & Intangible Assets
Categorized as marketing/brand, customer, artistic, contract or technology-based assets, must be valued under ASC 805 & ASC 350
International Business Combinations
Multinational firms pursuing M&A strategies face additional international financial & tax reporting requirements
Support for litigation, developing & providing direct testimony, arbitration and depositions
Mergers & Acquisitions
ASC 805 & ASC 350 make it critical for buyers & sellers to consider how a transaction impacts financial reporting
NOL carryforwards are a valuable asset & ownership or equity changes can trigger a valuation requirement
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 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.
Financial Sponsor: Hedge Fund
A hedge fund client held convertible note in a company that restructured outstanding debt. As part of restructure, the note was exchanged for two separate Term Loans.
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.