How Capital Waterfall Scenario Modeling Provides Insights into Deal Structuring
Are you advising a Company in an M&A transaction? Want to know how different valuations affect each stakeholder's share of the distribution waterfall?
Here is a case study of how the Capital Waterfall Scenario Analysis Solution can provide unique insights.
Challenge - Financial Advisor needs to guide executives through analysis of the impact of different valuations to determine impact on each class of securities. Decision makers need a clear and concise report showing the actual distribution waterfall by class of security holder at multiple valuations to make informed deal structuring decisions.
Solution - The Capital Waterfall Scenario Report provides a single snapshot of how each class of holders will be treated at multiple valuations. This report, like other reports generated by the Capital Waterfall Solution, is based on actual legal provisions in the investment documents, rather than pro forma assumptions. Getting complex legal provisions buried in investment documents into a financial model is challenging but the Capital Waterfall Solution bridges the gap between the attorneys who are expert at drafting and interpreting investment documents and the financial modelers who are expert at configuring Excel to produce distribution waterfalls. We have developed a proprietary process for converting legalese into Excel formula resulting in accurate distribution waterfalls. The report in the video shows by security class how different enterprise valuations impact their return as each holder exercises the actual conversion features to maximize their returns.
Benefits - Deal advisors and their clients enjoy the following benefits:
Gain insights into how the actual legal provisions impact the return by security class with different scenarios (i.e. enterprise values), rather than rely on inaccurate “pro forma” models.
Timely, accurate reports enable rapid decision making
Assess the likelihood of different holder’s willingness to approve a deal based on an accurate calculation of their share of the proceeds.