Valuation

This panel will consider the robustness of financial models and valuation techniques in assessing the value of financially distressed businesses vis-à-vis the market for debt and equity securities of such businesses. Market efficiency/accuracy will also be considered, as well as the circumstances that might warrant abandoning the values determined by the market in favor of a model-driven value estimate.

This session will outline methods of developing meaningful and timely revenue and cash flow forecasts for financially distressed businesses, including considerations that management takes into account in developing its forecast, commentary on relevant case law concerning such matters, and factors that could be considered by interested third parties and practitioners regarding the reasonableness of such projections, such as modeling techniques.

This panel will feature a discussion of basic option concepts, debt and equity claims, bankruptcy priorities and corporate governance issues.

This session will take a look at different valuation techniques, including asset approaches, market approaches and income approaches. Concepts such as time value of money, discounted cash flows, determining the discount rate and cost of capital, and terminal value assumptions will be illustrated. Comparable companies and precedent transactions to establish the relative enterprise and equity value of firms will also be examined and discussed.

This session will cover revenue and expense recognition, financial statement analysis, financial ratios, and the calculation and forecasting of a firm’s free cash flow.

This panel discussion will provide an update on recent developments regarding valuation in a distressed or bankruptcy environment. While some general valuation information will be included for context, the focus is on understanding the nature of current issues and their implications on future cases.

This panel will discuss examples of when and how t use valuation opinions and expertise, and the fee structure pitfalls that can impact credibility. When is it appropriate (if ever) to use success fees for valuation opinions.

Past valuation panels have focused on the three traditional methods for determining the enterprise value of an operating business: DCF, comparable company and comparable transaction. This panel will focus on sources of value or reductions in value that are sometimes disregarded, such as excess cash and working capital, underutilized real estate and hard assets, claims and other contingent assets, insurance claims, intellectual property portfolios, discontinued businesses and NOLs. Normalizing adjustments are also discussed, including those related to above-market compensation, insider contracts, and underinvestment in capital plan and brand equity

The federal code (and similarly state law) define "insolvent" as a "financial condition such that the sum of [the] entity's debts is greater than all of [the] entity's property, at a fair valuation..." 11 U.S.C. § 101(32)(A). Fair valuation is not defined in the bankruptcy code. How does fair valuation for solvency differ from fair market value which is used for valuation for income tax purposes? Or fair value which is used in shareholder oppression matters? What are the implications of using trading prices for the assets versus assuming continuity of operating within the existing legal entity? What are the differences it could create in measuring the cost of capital? Or contingent liabilities?