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Solvency Opinions
Before committing to a recapitalization, management should consider:
- Has projected cash flow been subjected to sensitivity analyses?
- Will the company have sufficient capital to withstand potential operating shortfalls?
- Does the fair value of assets exceed the total value of liabilities?
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Can the company meet each of its covenants throughout the life of the loan?
We play an integral role in leveraged transactions, conducting thorough analyses to protect lenders, shareholders, directors and their advisors. Our Solvency Opinions are used by lenders, private equity funds, boards of directors, trusted advisors, management and business owners throughout the world for:
- Mergers, Acquisitions and Divestitures
- Financings
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Wealth and Tax Transfer Transactions
 “In our experience as investment bankers, the solvency opinion typically is requested late in the transaction process. It is imperative for the solvency opinion to be completed quickly and accurately in order to keep the deal on track. We refer Marshall & Stevens into these situations with confidence that they will commit the necessary resources to get the job done. Each time, they have delivered exactly as promised.”
William K. Doyle
Managing Partner
Kerlin Capital Group
We apply the following solvency tests to determine if, post transaction:
- The fair value of the company’s assets would exceed the total amount of the company’s debts;
- It was reasonable to anticipate that the company would be able to pay its debts as they become due;
- The company would have a reasonable amount of capital with which to engage in its business;
- Based on the financial projections provided by management, it was reasonable to anticipate that the company would satisfy the financial covenants listed in the loan agreement for each of the forecasted periods; and
- Assuming that the company performed at the levels projected by management, it was reasonable to anticipate that the company would be able to refinance the balloon payment of the subject debt securities at maturity.
We do not waver on our promise to be timely with our work, communicate openly with our clients, and present well-written reports — all for reasonable fees.
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