Our Expertise with Portfolio Company Valuations
Alternative asset managers, such as private equity firms, often use investor capital to purchase assets with a view toward generating favorable returns typically in a pre-defined target period of ownership. A greater emphasis on corporate governance along with certain regulatory changes have resulted in alternative asset managers increasingly seeking independent valuation advice.
Oftentimes, sponsors make equity investments but our experience in valuing illiquid assets includes a multitude of investment types including, but not necessarily limited to, the following:
- Common and preferred stock
- Warrants & options
- Senior debt
- Subordinated debt
- Convertible debt
- Other derivatives (e.g., interest rate swaps)
Our clients impart best practices by providing improved reporting to stakeholders by seeking independent fair value measurements for so called Level 3 assets; that is, which are very difficult to value due to a lack of observable inputs.
Independent valuation estimates add objectivity to the investment reporting of illiquid assets, thus enhancing the confidence of all parties involved. They also help assure compliance with mark-to-market accounting standards including ASC Topic 820 – Fair Value Measurement and Disclosures. Our clients impart best practices by providing improved reporting to stakeholders by seeking independent fair value measurements for Level 3 assets; that is, assets for which there is no active market and very difficult to value due to a lack of observable inputs.
In addition to independent opinions of value, another service we provide is the review of sponsor or management determinations of value. This streamlined service includes a series of procedures utilized to confirm the reasonableness of the fair value determination. We conduct a financial analysis of the subject asset, review the capital market evidence (e.g., guideline companies, transactions, rate of return data), evaluate and analyze the methods used, and review for consistency of application and best practices.
As a leading, independent valuation firm, MPI assists clients by providing detailed, transparent, and credible valuations. Our independent valuation advice, whether it be direct valuations of illiquid assets or reviews of valuations, valuation policies, and procedures, provides comfort to our clients and their stakeholders with regard to fair value assessment. Please contact us if we may be of assistance.
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