Solvency & Capital Adequacy

Solvency & Capital Adequacy

Solvency is broadly defined as the ability to meet debt obligations as they become due. A solvency analysis is a prudent and logical method of securing the correct level of assurance in leveraged buyout or other transaction. Three tests must be satisfied for an enterprise to be considered solvent:

 

Madison Street Capital’s experienced professionals have the expertise in valuations, the in-depth knowledge of bankruptcy laws, and deep and broad-ranging M&A experience to produce accurate and independent solvency opinions for boards of directors, lending institutions, equity sponsors, advisors, and other clients. We analyze historical and projected financial statements to identify all contingent liabilities such as letters of credit, convertible securities, tax liabilities, and pending litigation while thoroughly reviewing documents such as SEC filings, loan covenants, and operating plans. Our solvency opinions can establish a lender’s trust in making a loan, proffer a form of due diligence and evidence of good faith, and mitigate the risk of bankruptcy liability for all parties involved in a given transaction.