In Financial Projections (Part I of II) This is a two-part article that considers the review and assessment of prospective financial information. Specifically, this discussion describes the behavioral bias that may influence financial projections. This discussion should inform any party involved in compiling or assessing financial projections. This discussion is particularly relevant for fiduciaries who may be involved in the transaction or other investment decision-making process. Introduction This discussion considers the review and assessment of financial projections that are prepared as part of a corporate transaction. This discussion may inform any party involved in compiling or assessing financial projections. This…
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Part II of II This is a two-part article. In this second part, the authors discuss valuation and the approaches used to value contingent assets and liabilities. Read Part I here.
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Part I of II This is a two-part article. A variety of methods may be appropriate, depending on the context, to value contingent or disputed assets or claims in solvency opinions. These include probability discount, hindsight, and traditional valuation of future earnings. Other possibilities are the cost of insurance or Monte Carlo simulation. The authors discuss the cases and the uses and limitations of the various methods.