Financial Risk Management

Valuation of Complex Derivatives and Securities

Understanding the economics of valuation is essential in all but the simplest of settings. NERA provides valuation expertise in three general contexts: business valuation, tangible asset valuation, and financial asset valuation.

In the context of business and tangible asset valuation, NERA has utilized valuation methodologies which are based on company comparables and earnings multiples, the values of other assets from the same company or portfolio, financial modeling and estimation of the company's future cash flows, and comparisons to valuations of benchmark assets in the public domain.

For financial and quasi-financial assets and derivatives contracts, our valuations techniques leverage generally accepted discounted cash flows and mark-to-market methods, derivatives option models, real options techniques, probability-weighted and dynamic cash flow models, custom simulation models, reference/inference-based comparables approaches, and zero-arbitrage calculation techniques. Our experience in a variety of asset classes allows us to quickly assess market specifics, identify important and potentially unique valuation characteristics of the asset, assess the impact of market economics on market value, and use defendable, industry standard methods to derive a fair valuation. With the ability to combine economics, finance, statistics, and econometrics, NERA’s experts can execute valuation methods that go beyond traditional approaches to valuation, especially in cases where historical data and other valuation benchmarks are either unavailable or considered inadequate.