SOLVENCY OPINION: Uses & Issues

Sponsored By Houlihan Smith & Company, Inc.

Topics:

Accounting

Banking & Capital Markets

Finance & Risk Management

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Abstract:

When a highly leveraged transaction takes place, it is for the benefit of a company’s board of directors, secured and unsecured creditors, stockholders and financial advisors to seek a solvency opinion from an experienced financial advisor or investment bank. An effective solvency opinion will independently demonstrate the probable impact of the acquisition on working capital and mitigate the risk of bankruptcy liability and future fraudulent conveyance claims. Solvency opinions must be reached through a systematic approach of due diligence that entails a balance sheet test, cash flow test, and capitalization test before reaching an objective opinion.

DETAILS

Sponsored by: Houlihan Smith & Company, Inc.

Released: June 30, 2009

Length: 8 pages

Format: PDF (459 kb)

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