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Client Results

Cheap Stock

Client: Software for creating special effects in movies.
Issues: Going public (IPO). SEC required independent valuation of minority shares and options granted to management.
Result: Initially, SEC rejected management’s opinion of value. We developed very supportable rational that Cheap Stock carried unusually high risk. SEC accepted our opinion.

Intangible Assets (Intellectual Property)

Client: Technology holding company.
Issues: Purchase price for concept of encryption security software. Inventor and investor were initially far apart on value of Intangible Asset.
Result: Significant collaboration with each party to analyze how concept would be created as software and the various market applications. Engagement resulted in agreement on price and extensive business plan to raise equity.

Preferred Stock

Client: Large manufacturer merging into public company.
Issues: Part of transaction consideration was newly issued Preferred Stock. Value of preferred greatly affected taxable gain to owners of manufacturer.
Result: We developed intricate matrix showing value of Preferred Stock with a variety of terms and features. Parties agreed to a set of conditions attached to preferred, which balanced tax effect with purchase price.

Cost Segregation

Client: Buyer of major regional shopping center.
Issues: Value assigned to land. One set of mechanical drawings not available.
Result: For land, we performed restricted appraisal to value raw land. Comparables approach for similar acreage provided supportable minimum land value. For cost segregation, we created detailed cost model based on other drawings and site inspection. Our software created appropriate direct and indirect costing for each building and tenant.

Fairness Opinion

Client: Mid-size public company.
Issues: Public company (Internet) linked to private firm for advertising and sales. Also, major shareholder of private firm was controlling party in public entity. For rollup of private into public, needed relative values of each. Fairness opinion required to buyout some minority holders in public company.
Result: Complex and iterative process to value private firm, since its sole client was public Internet company. SEC carefully scrutinized our supporting data and analysis. Approval was granted after we responded to significant inquires from SEC.

Allocation of Purchase Price

Client: Manufacturer of consumer products.
Issues: Acquisition of technology in related products. Significant intellectual property involved custom software and proprietary, patented processes.
Result: We were engaged prior to the acquisition, primarily to estimate the intangible asset value and confirm the transaction price. Our assignment after the deal closed included all assets – real estate, equipment, inventory and intangibles. In addition, we assigned value to the In Process R&D. Residual goodwill was nominal.

Buy-Sell Agreement

Client: Distributor of electronic components.
Issues: Three shareholders wanted succession protection.
Result: Business valued as basis for life insurance coverage. Key ratios developed so company could update initial valuation.

Real Estate

Client: Owner of numerous mobile home parks throughout U.S.
Issues: Completion of sale of parks as part of settlement of Chapter 11 Bankruptcy. Trustee also required Fairness Opinion regarding sale price.
Result: We appraised 21 locations within 2 months to meet court mandated timeline. Rigorous cash flow analysis and risk matrix developed to support Fairness Opinion.

Discount Analysis

Client: Real estate holding company.
Issues: Complicated and interlocking partnerships owned portions of various income producing properties. Analysis required to discount LP and GP interests at several levels.
Result: Provided exhaustive roadmap for each discount at three levels of ownership. Arguments and analysis supported third level; however, client decided to report minority and marketability discounts at only two levels. We sustained all discounts upon audit by IRS.

Machinery & Equipment (and Inventory)

Client: Aluminum foundry and rolling mill.
Issues: For buyout by management, bank required orderly and forced liquidation values as collateral support.
Result: Provided detailed appraisal of each item of machinery and equipment. Also, created statistical sample to verify inventory counts and value estimates. Values used for multiple purposes: bank collateral; allocation for book and tax basis; insurable values; property tax reporting.

Goodwill Impairment

Client: Manufacturer of medical identification products.
Issues: Prior acquisition of related technology was questioned by auditors for possible goodwill impairment.
Result: Followed procedures of FAS 142. Analyzed value of reporting unit acquired a few years ago. Value of unit was less than the carrying value. Completed step two of required procedures and revalued each intangible asset. Result was an impairment of 75% of the goodwill on balance sheet.

C to S Corporate Conversion

Client: Engineering consultant to construction industry.
Issues: Determine business value at end of fiscal year to determine built-in gain.
Result: Conversion of organization to S corporation, with minimum taxable gain in event of sale of company in ensuing 10 years.

Auction / Liquidation

Client: Multi-unit foodservice operator.
Issues: Assignment for benefit of creditors (ABC) required location closings. Asset in multiple facilities. Immediate sales required, with occupancy holding costs escalating.
Result: We provided multiple auction and liquidation solutions. Conducted on- premise auctions at many of the facilities, staged geographically. Each auction was completed in one day, with checkout and removal over the course of the following two days. In addition, landlord objections and occupancy expenses were minimized. Client received optimum sales prices for assets.

Due Diligence

Client: Oil and gas producer.
Issues: Outside due diligence package for investment bank selling partnership interests.
Result: Coordinated investigation report on management and geological details into our due diligence report. Provided complete review and interpretation of prior drilling projects, as well as private placement for new partnerships. Included financial viability analysis of the producer, both historical and pro-forma.

Transfer Pricing

Client: Large U.S. company with engineering technology.
Issues: Transfer technology to Bermuda and objectively minimize U.S. tax burden.
Result: Performed rigorous IRC Section 482 analysis. First step was to value technology. Next part of valuation was to determine market value of licensing payment to parent company. This latter analysis involved economic matrix on comparable profits (industry factors) and various profit splits related to parent’s return on capital.

Non-Profit

Client: Medical Foundation.
Issues: Balance family desire to fund medical research with Federal regulations.
Result: Foundation required to payout most of earned income. Payout based on annual market value of assts, some of which were income producing real estate and businesses. Client able to balance payout mandate with underlying value of assets.

Litigation

Client: Major oil corporation with investment in supplier’s technology.
Issues: Damages from technology infringement and contractual default.
Result: Complete study of market feasibility for innovative technology. Result was value assigned to technology. Also, determined the economic damages to supplier and oil company based upon the technology value and licensing potential, as well as production cost savings. Court affirmed that damages included decrease in business value (goodwill) of supplier.

Options

Client: Public company with numerous retail locations.
Issues: Stock market had pushed executive stock options “underwater” or well below strike price.
Result: Assessed numerous factors for issue of new options, including intrinsic value of the business. Even though it was public, stock was thinly traded. To estimate current value of Options, we focused on stock volatility, dilution, financial stability of company and expiration time to exercise.

Sale Price

Client: A regional paving and roofing asphalt manufacturer.
Issues: Out-of-state ownership was forced to sell the entire operation on short notice. This included a refinery and separate tank farm, including underground pipelines, and three distribution facilities in another state.
Result: TMG valuation experts and management consultants worked quickly and efficiently with corporate management to determine market value. We coordinated closely with interested buyers to achieve the asking price of $56 million in less than six months.

Management Consulting

Client: Well-established short run/high electrical component manufacturer specializing in high reliability parts to the defense, aerospace and commercial power industries.
Issues: With post Cold War slowdown in defense spending, the company was slow to adjust its cost structure in response to reduced revenues. This created major credit problems with the company’s foreign owned bank.
Result: TMG management and financial consultants assumed temporary financial/operating management roles. A new bank was selected who better understood the client’s industry and business cycle. Simultaneously, TMG management consultants help streamline and update firm’s manufacturing and accounting practices. The company returned to profitability.

Financial Management

Client: Nationwide retailer of self-serve gasoline, diesel, automotive and convenience products with over 500 locations.
Issues: Cash collection and centralization was inefficient and unreliable due to location managers lax cash deposit and reporting procedures to headquarters by phone.
Result: TMG management consultants designed a centralized call center staffed by three operators, who initiated calls to each store location daily. Deposit information was keyed into a custom designed computer data base formatted for daily transmission to the concentration bank. The bank created automated clearing house (ACH) debit checks each night to transfer funds from every remote bank account. The net corporate savings in accelerated cash flow (after system costs) exceeded $100,000 per year.

Recapitalization

Client: Project Specialty Food, one of the largest food distributors in Western U.S.
Issues: This private, closely-held family business sought to obtain liquidity for the retiring shareholders while allowing management to increase their ownership stake.
Result: We structured a sale of the business in the form of a leveraged recapitalization that allowed selling shareholders to receive substantial cash consideration for their shares, while providing growth capital for the business. Deal allowed family and non-family management members to increase their ownership stake from 5 percent to 60 percent.

Debt Raise

Client: Project Specialty Food, one of the largest food distributors in Western U.S.
Issues: This company sought to refinance existing acquisition indebtedness and secure growth capital in a difficult economy while earnings growth slowed. The incumbent lender had issued a demand for payment for its loan, due in 45 days from the date we were hired.
Result: We secured senior cash flow credit facilities of $5 million from a highly-regarded U.S. institution. We also removed the daily and monthly receivables reporting requirement, as well as borrowing base certificate requirement. The interest rates under the new credit facilities were 50 percent lower than previous rates. Transaction completed within 30 days.

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