Q.  What does it mean to maximize "valuation"?

A.  In any investor-oriented business plans, we generally seek to maximize “valuation”.  In reality, our mission is much more complex; it is to maximize “client objectives,” which may not always be simplistic stock valuation.  For instance, some clients are interested in maintaining “management control” of their company.  For others, it may be to be “number one but in a limited niche,” or do something “social redeeming.” – regardless of shareholder value.  Even in maximizing shareholder valuation, there is a trade-off between existing shareholders and incoming shareholders, and between short-term valuation and long-term valuation.  We believe that in optimizing “valuation” therefore is highly nuanced.  Any business and transaction scheme optimized for one parameter is usually mathematically sub-optimized for the other parameters.  Our first objective is always to define our client's objective(s), and then to find ways to maximize it (them).

Q.  How about the Attorneys and Investment Bankers?

A.  Further adding to the complexity of valuation maximization, our projects usually involve multiple stakeholders.  Along with the issuing company (as a legal entity), there is the company’s management, their security attorneys and their placement agent (investment banker).  Each brings a different market basket of parameters, calling for different valuation maximization strategies.  We understand these nuances and seeks to optimize deal valuation in this larger sense.

Q.  How about the target investor?

A.  After we understand the company’s structural dynamics and objectives of stakeholders, our second task is to contemplate the idiosyncrasies of the target investor for the deal.  Many analysts say that the three largest drivers for deal valuation are (i) potential cash flow, (ii) quality of management, and (iii) perceived risk.  In fact, it is more often the idiosyncrasies of the target investor.  We cannot optimize a valuation in the absence of knowledge of the target investor.  This is clearly true in M&A work, but is no less important in evaluation Private Placements and Public Offerings.  The importance of the target investor in valuation means that it has to be taken into account in defining the business, and even more so in the deal’s financial structure and terms.

Q.  What does Black Book "Balance" Mean?

A.  "Black Book" is our in-house term for a transaction offering memorandum.  Black Books must be "balanced."  Like a biological organism, any business entity is a complex marriage of multiple tightly coupled aspects.  The product and marketing strategies must fit like a glove over the realities of the marketplace.  They, in turn, need be tightly coupled with production, organizational and cultural aspects.  All of this must be consistent with Company's present and likely future resources.  Most importantly, the financial structure driven by the proposed financing must synergistic with present and future needs, and be resilient against downturns in the marketplace and shifting strategy requirements going forward.  As in a biological organism, any imbalance between any of these aspects leads to a deal proposal that is sub-optimized with regard to maximizing valuation.  We assure that each Black Book passes rigorous balance standards.