Case Studies
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Duff & Phelps was retained by an enterprise software developer to value its common stock for purposes of a stock option grant. Management required an independent valuation to set the option exercise price as of the grant date. Our scope of services included an estimation of the company’s enterprise value and consideration of the fair value of debt to arrive at common stock value. Our client has agreed to retain Duff & Phelps for periodic valuation updates.
Our publicly traded semiconductor manufacturing client retained us to provide annual goodwill impairment testing for its three reporting units. Each of these reporting units had different sales growth prospects, operating margins and business risk profiles. We prepared detailed Discounted Cash Flow (DCF) analyses to estimate values based on the company’s strategic plan. Our DCF valuation results were corroborated by applying a market comparable approach. The results of our work were used by management in its discussions with auditors and for financial reporting. A mid-market company, #1 in the US in its niche segment of the chemical industry, had grown consistently over several decades, but recent growth had stalled as their primary market had reached a plateau. Many of the company’s growth opportunities would require outside investment, which the company had heretofore avoided. An internet financial services start-up had only recently started generating revenues. Financial projections existed only for one tiny sliver of the business. To support capital raising, and to focus their efforts on the best opportunities, our client needed credible projections of the business’ potential revenues and a valuation of the business. Our client, a multi-billion dollar retailer with hundreds of stores, had always been highly profitable with strong revenue growth, but had recently experienced an unanticipated decline in profit margins. They needed to improve their understanding of profitability by product line, to support strategic decision-making in a politically charged environment. Our client, a large technology company, was about to spin off a manufacturing subsidiary. Prior to the spin-off transaction, our client had guaranteed the subsidiary’s performance on product warranties and lease obligations. Post-separation, the remaining entity will charge the spun-off entity a fee for these guarantees. Also, as part of the separation transaction, the spun-off entity will indemnify the parent against certain potential adverse tax outcomes. The client required an estimate of the fair value of these guarantees and indemnifications, for financial reporting purposes.
Duff & Phelps was engaged by one of the country’s largest specialty retailers to estimate the Fair Market Value of the business enterprise and its tangible and intangible assets for financial and tax reporting purposes.
A Creditor had a loan facility to a debtor whose collateral – various pools of consumer loans – was not behaving (i.e., paying) as planned. Duff & Phelps was retained to study the collateral and the behaviours of the counterparty consumers on behalf of the Creditor. We quantified the probabilities of default and losses given default for the consumer pools given various criteria such as age of loan, FICO score of borrower and nature/extent of collateral. We calibrated these macro findings to give effect for seasonality of the economic cycle and the level of unemployment over time. Our Fortune 500 client, a minority owner in a company launching an innovative high tech solution, asked us to value options it had to (1) increase its equity ownership or (2) acquire the company outright, at specified prices and timeframes. Two investment banks, relying heavily on management’s projections, had valued the company at about $600 million.
Duff & Phelps global platform provided Hilite International with the restructuring and M&A specialists and automotive industry expertise it needed to successfully restructure the business in multiple countries and jurisdictions. |
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Case Studies | Duff & Phelps