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.