Buried deep in the LendingClub financial statements is a curious number. 7.2% is the investment return LendingClub believes their loans should earn for their investors. The 2016 return estimate, the weighted average across all loan grades, is down from 9.0% reported for 2015, presumably due to greater projected losses. It is consistent with the investment
Valuing a stand-alone portfolio holding is like guessing the position of a jumping-jack. Valuing the whole portfolio is more like predicting the position of a rider in the luge. When tracking portfolio performance, valuations can deliver surprisingly precise measurements: #1. Each individual valuation error is less significant at the portfolio level. #2. Valuation errors are
Any finance textbook will tell us that many, perhaps the majority of acquisitions fail. Failure is defined as the acquirer’s inability to recover economic value at least equal to the purchase price. Accurate analysis of acquisition outcomes is often complex. US GAAP addresses the issue by providing investors with: • intangible asset amortization as
Fair value is the amount for which a note could be bought or sold in a transaction between willing parties. The price represents a distillation of historical and expected charge-offs, prepayments, market risks, liquidity and required investor returns. Most consumer loans are not traded, thus accurate portfolio valuation relies on modeling informed by observed loan
Purchase accounting requires allocation of the purchase price among acquired assets on a fair value basis. The process is referred to as purchase price allocation (PPA) and it relies heavily on the valuation of acquired assets, mostly intangibles. PPA benchmarking is popular in assessing the reasonableness of any given PPA by comparing it with similar
Sorbus Advisors LLC studied purchase price allocations in biopharmaceutical industry titled “Valuation of Goodwill and Intangibles in 2015 BioPharmaceutical Transactions.” The study focused on recognition, valuation, and determination of useful lives of pertinent intangible assets, contingent considerations and goodwill. While no two acquisitions are the same, common themes in the valuation of intangibles and goodwill
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