Valuation of private debt or instruments economically equivalent to debt (preference shares) based on a multi-criteria analysis. Intervention in transactional, tax, or litigation contexts, as well as within an accounting or reporting framework.
Valuing a debt instrument involves estimating the market interest or yield rate, where possible using a multi-criteria approach.
It is required in particular for transactions, capital reorganisations, calculating the NAV of investment funds, setting transfer prices, shareholder disputes, tax audits, or litigation.
After analysing the company's profile, its market, and any debt terms negotiated with third parties — the spread naturally being a relative concept, with loans positioned relative to one another — we seek to implement a multi-criteria approach: the scenario method, a method based on the analysis of financial ratios typically used by rating agencies, and a method based on comparison with similar transactions (benchmarks). Once the market rate has been determined, the value is obtained using a discounted cash flow method.
Analysis of the issuer (historical and forward-looking), together with the analysis of the economic characteristics of the instrument being valued, provides an understanding of the level of risk associated with it.
Application of appropriate approaches: credit performance analysis based on the financial ratios typically used by rating agencies and the option-based method. Separate valuation, where applicable, of the optional components of debt instruments (such as a conversion option or warrants attached to a bond).
The company's situation may justify premiums or discounts. Where there is a risk to the continuity of operations, a liquidation approach may be necessary.
Presentation of the work in a structured report setting out methods, assumptions, and conclusions, usable in negotiations, legal proceedings, or accounting documentation (in particular for fund portfolio valuations).
We value all types of debt or instruments whose economic characteristics are similar to debt: bonds, loans, preference shares, convertible bonds, bonds with warrants attached, structured loans, and more.
A multi-criteria analysis, where possible, strengthens the justification of the rate or value used and helps limit the risk of challenge.
In the event of a transaction, justification to other investors, transfer pricing, a tax audit, or litigation requiring a well-reasoned and documented analysis. It may also be required in accounting and financial reporting contexts (calculating the NAV of investment funds, investor communications).
We define the schedule in our engagement proposal, following an initial analysis of the company and its context.
We have developed valuation methods that have met the expectations of stakeholders (investors, statutory auditors, lawyers, and courts).
Use of dedicated databases and internal benchmarks.
Structured, documented work that can be used in negotiations, accounting documentation, or litigation.
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