Special Situation Models

The skill

Values companies the standard DCF cannot handle, across five branches — distress (failure probability from a bond price or rating, blended with the distress-sale outcome), financial service firms (equity excess return and FCFE against regulatory capital, since a bank gets no FCFF and no optimal debt ratio), private companies (total beta for an undiversified owner, Silber and bid-ask illiquidity discounts), cyclical and commodity firms (mid-cycle normalized earnings), and young negative-earnings firms (a revenue and margin path plus survival odds, emitted as a dcf-valuation-engine payload). Also walks a private owner's value to an IPO offer price line by line. Use when valuing a bank, insurer, startup, distressed firm, private business, miner or deep cyclical, when pricing an IPO or a sale to a public buyer, or when asked about probability of distress, total beta, illiquidity discount, excess return models, normalized earnings, or negative-earnings valuation.

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