Financial advisory services provided in these transactions usually culminate in the issuance of a fairness opinion, solvency opinion or valuation opinion. However, HVA will also function as an advisor to the client in transactions where no issuance of an opinion is required.
Because our fees for transaction opinions are never contingent upon the consummation of the transaction, HVA's opinions are free of the inherent conflicts of interest that compromise many fairness opinions issued by investment banks. By operating efficiently and without redundant layers of management, HVA brings its substantial transaction experience to bear on middle market transactions on a much more cost effective basis than most investment banks or other national firms.
Fairness Opinions
Fiduciaries rely on HVA to provide independent
advice regarding the financial fairness
of corporate transactions. We have issued
fairness opinions in a multitude of transactions
on behalf of public shareholders, common
stockholders in private companies, preferred
stockholders, option holders, limited
partners, creditors, ESOPs and other benefit
plans, charitable foundations and trusts
A proper determination of financial fairness,
or "fairness from a financial point of
view", requires the fairness opinion provider
to be extremely diligent and experienced
enough to recognize and address critical
issues. When HVA is engaged to assess
the financial fairness of a transaction
to a particular stakeholder, our analysis
goes beyond the issue of whether the stakeholder
will receive at least equivalent value
in the transaction. We also evaluate the
stakeholder's investment position relative
to other transaction participants, particularly
when potential conflicts of interest exist.
In addition, we consider the relative
investment attributes of competing offers
or strategic alternatives. HVA scrutinizes
all aspects of the proposed transaction,
including transaction documents, sources
and uses of funds, financial statements
and projections and, if necessary, will
recommend changes in the transaction in
order to meet the investment goals of
the various parties. These goals are sometimes
achieved through HVA's design of different
classes of securities. Our work often
results in improvements to the transaction
structure and makes the ultimate determination
of fairness more defensible.
Solvency Opinions
Issued in connection with a leveraged transaction,
an affirmative solvency opinion involves
the determination by an independent financial
advisor that, after giving effect to the
transaction: 1) the value of the company's
assets exceeds its liabilities (the balance
sheet test), 2) the company will be able
to pay its debts as they mature (the cash
flow test), and 3) the company will not
be left with unreasonably small capital
to conduct its business (the capital adequacy
test). Because of the highly specialized
nature of solvency opinions, only a handful
of firms have the experience to craft an
analysis that properly satisfies these tests.
Certain HVA members are among the most experienced
professionals in the country when it comes
to managing solvency opinion engagements,
having analyzed solvency in leveraged transactions
in the billions of dollars since the mid-1980s.
Before issuing a solvency opinion, HVA analyzes
all aspects of the proposed transaction,
including a valuation of the assets (typically
on a going concern basis), a detailed review
of credit agreements, modeling of debt payments
and financial covenants, and a sensitivity
analysis testing the ability of the company
to meet its obligations under potentially
adverse business conditions. A solvency
opinion issued by HVA is the result of a
comprehensive assessment of the company's
financial viability on a post-transaction
basis that provides boards of directors,
senior lenders and selling shareholders
with a valuable tool to defend against a
fraudulent conveyance claim.
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M&A Advisory
In M&A transactions, HVA advises both buyers
and sellers on valuation and structure.
These services take many forms. At times,
we are engaged as an impartial third party
helping both buyers and sellers to come
to an agreement on pricing and deal terms.
On other occasions, we represent a particular
party, helping our client achieve the optimal
financial benefit from the transaction.
Because of our deep knowledge of valuation,
we are well suited to consult on the valuation
of consideration as well as provide an analysis
of synergistic benefits under multiple scenarios.
In still other situations, we quarterback
the transaction, helping the client to put
together its team of professionals and negotiate
the deal.
Non-Performing
Assets
HVA has been retained on numerous occasions
to render valuations of non-performing and
distressed securities. These assignments
include valuations for bankruptcy and restructuring
purposes, as well as the sale of distressed
assets. The analysis of this type of asset
requires innovation and creativity. HVA's
work in this area is enhanced through close
cooperation with clients, their advisors
and other parties to the transaction. Our
opinions of value assist bankruptcy trustees,
investors and executives in their decisions
related to distressed securities.
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Securities
Design
HVA' s experience in the design of securities
includes the allocation of equity value
among multiple classes of stock, as well
as structuring the characteristics of
a newly issued security. Our understanding
of the components of value for complex
hybrid securities - or securities that
combine elements of fixed income, preferred
return, equity participation and option-like
features - gives HVA the tools to address
even the most challenging securities design
issues.
HVA's experience with hybrid securities
derives from its work in the valuation
of early-stage companies with multiple
classes of preferred and common stock,
stock options and warrants. We apply that
knowledge to structure securities designed
to meet the different investment objectives
of the various stakeholders in a transaction,
at the same time giving stakeholders an
understanding of the range of future values
for each class of security under various
scenarios. We use several proprietary
valuation models in the design and valuation
of newly issued securities.
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Due Diligence
Service
As a result of our valuation work, members
of the HVA team have developed a strong
proficiency in the area of due diligence.
In some of our assignments, the clients
are specifically looking for the comprehensive
reporting on the facts and findings of
our due diligence investigation and use
this information to assist in conducting
their business or pass the information
along to their partners or vendors.
Separately, HVA offers due diligence services
as a stand-alone product. This service
is typically requested in connection with
a transaction or a public offering of
securities. The comprehensive service
includes history of the business, industry
overview, background information on key
individuals, risk factors, and presentation
of the proposed transaction.
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