Complex Securities Valuation

Guarantee and Other Contingent Payout Valuation

Companies may have contingent payouts, or liabilities, for many reasons. For example, a company might have made third-party guarantees or owe milestone payments to investors. These liabilities or assets may need to be valued based on the range of potential outcomes. As a result, contingent payout valuation can be a very complex exercise; it requires understanding what payments arise in what circumstances, and what the values of these payments are.

Contingent Payout Valuation Services

We work with you to do the following:

  • Identify which assets and liabilities can be valued as contingencies
  • Understand and model the instrument, considering the appropriate risks and identify probabilities of payment
  • Assess the risk and appropriate discounting of the instrument
  • Measure the value of contingent assets and liabilities for each reporting date until the contingency is resolved
  • Model the effects on future earnings under a variety of scenarios

Gain greater visibility into the financial implications of contingent assets and liabilities.