Debt valuation

Due diligence: debt valuation and forecasting

Debt advisory and consultancy case study

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The client

A UK investment fund

Situation

The client was considering investing in a debt purchaser and was seeking an independent expert to help inform their pricing and investment decision

The project

Over four weeks the TDX Group Advisory team used a range of statistical modelling techniques based on the debt purchaser’s existing cash generation, operational information and financing structure to value the portfolio and forecast cash.

They also stress-tested the cash flows under a range of different scenarios to provide likely outcomes.

TDX Group solution

A bespoke Advisory Services engagement to value the debt purchaser’s portfolio

Portfolio valuation process

  1. Base cash collected curve - account liquidation developed based on historic performance
  2. Balance and portfolio level degradation - cash collected flow adjusted for factors that cause payment degradation
  3. Cash flow modelling - Model calculates costs of collection and funding
  4. Funding option analysis - cash flow model calculates maximum price payable

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