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Services for Global Hedge Fund Manager
The Situation
A global hedge fund manager retained NERA to determine the fair market value of 100 percent of the company's equity as part of the overall value for a pari passu participation of new shareholders.
NERA's Role
NERA developed a simulation model that included basic assumptions about fund performance and volatility, the rate at which investors withdrew assets from a fund, management and performance fees, the risk-free interest rate, and the threshold at which the investment management company would liquidate the fund if the assets were to fall below a given level of the fund's high-water mark.
The Result
NERA's services included both a valuation and a transfer pricing analysis, ensuring that the equity valuation was based upon arm's length transfer prices between the investment management company and affiliated group members.