Client: Fortune Global 200 Specialty Products Unit
Challenge: Identify an Exit Strategy on Tightly Regulated Assets
As part of a strategy to reposition its healthcare business, a Fortune Global 200 company wanted to divest the assets of a division based in the United States whose inventory is used in the manufacture of lifesaving biopharmaceutical products. The spin-off was valued at more than $600 million and would become one of the largest transactions of 2005. The company asked AccuVal to appraise the value of its machinery, inventory, real property and business enterprise for use as collateral for an asset-based loan that would be syndicated to money center banks globally.
The valuation was complicated by stringent Food and Drug Administration (FDA) regulations. That oversight significantly affected the asset classes appraised, including the design of the real estate, characteristics of the machinery and the storage, handling and recordkeeping for the inventory. In addition, the biopharmaceutical field is a highly specialized industry, and no major lenders had experience with the assets used in this industry. Through its research, and by working with former FDA officials who assisted in the evaluation, AccuVal was able to identify the issues affecting the value and salability of the assets, assuming they were liquidated on a piecemeal basis. The firm thoroughly documented these issues in its appraisal reports, giving comfort to a large syndication of lending institutions that the transaction was worthy of a credit facility totaling hundreds of millions of dollars.
Once AccuVal developed a valuation benchmark that met the standards of the country's largest asset-based lenders and an exit strategy that met regulators' approvals, one of the largest transactions in the history of the biopharmaceutical industry was consummated. The company sold the business to a corporation formed and controlled by affiliates of two of the country's largest private equity firms, realizing nearly $600 million.
Ability to solve very complicated valuation problems and present findings in a simplified manner. Experience in valuations of breakthrough industries, unusual asset classes and unique product types. Expertise to develop valuation benchmarks accepted by money center banks and major investment syndicates. That's The AccuVal AdVantage™ at work.