4. Why do you need a valuation ?
Start by asking the key scoping questions !
ī§ What is the valuation needed for ?
ī§ Why is a professional valuation requested ?
ī Required - Accounting & Taxation
ī Expert Valuation
ī Commercial Valuation
ī§ Who is the audience ?
ī§ What is the standard of value ?
ī§ What is really at stake ?
ī§ How should it be priced ?
5. Required Valuations-Accounting & Taxation
Required Valuations are prepared when audiences such as the SEC,
the IRS, and/or lenders ask for them to be done
ī§ They are prepared to fulfill requirements under US GAAP, IFRS, and/or the IRC
ī§ They are more theoretical than commercial
ī§ The standard of value is Fair Value or Fair Market Value
ī§ Generally Accepted Valuation Principles must be used
ī Cost method
ī Market method
ī Income method
ī§ The point of view for the valuation is a market participantâs view, i.e. a third person
viewpoint
7. Taxation Examples
ī§ Property transferred for services (IRC 83 (b))
ī§ Income from discharge of indebtedness (IRC 108)
ī§ âWorthless Stockâ analysis and support
ī§ Charitable contributions and gifts (IRC 170)
ī§ Golden parachute payments (IRG 280G)
ī§ Stock purchases treated as asset acquisitions (IRC 338)
ī§ Built-in-Losses
8. More Taxation Examples
ī§ NOL Limitations (IRC 382)
ī§ Compensation (IRC 409A)
ī§ Designated settlement funds (IRC 468B)
ī§ Transfer Pricing (IRC 482)
ī§ IRC 864 Allocations
ī§ State & Local Taxation
ī§ Gift and Estate Taxation
ī§ Restructuring & Forbearance Valuations
9. Risks & Pricing
Risks
ī§ Compliance
ī§ Audit
ī§ Reporting
ī§ Enforcement
ī§ Reputation
ī§ Internal optics
ī§ Audit fee escalation
Pricing
ī§ Fixed - Negotiated one time
fixed fee; or
ī§ Hybrid - Variable to set up the
valuation portfolio and defend
in audit review, followed by
monthly or quarterly fixed fee
updates
10. Essential Success Factors
ī§ Detailed documentation and support
ī§ Experience = Broad and deep, practicing in front of Big 4, SEC, and IRS
ī§ Transparency = No âblack boxesâ
ī§ Carefully selected and vetted market inputs
ī§ Ability to clearly articulate findings to any audience
ī§ Expert and clean model design
ī§ Real industry experience
ī§ One-stop shopping = we can appraise real estate and machinery/
equipment as well
12. Navigant Consulting, Inc.
Business Description
Navigant Consulting, Inc. is a
specialized, independent
advisory firm that supports
companies, lenders,
institutional investors, legal
counsel, and government
agencies. The company focuses
on entities and industries
facing the challenges of
uncertainty, risk, distress and
significant change, and on the
issues driving these
transformations.
Ticker NCI (NYSE)
2013 Revenue $834 million
Professionals 4,000+
Headquarters Chicago, IL
Senior Management
â Julie Howard, CEO and
Chairman, Navigant
â Cindy Baier, CFO and EVP
â Richard D. Hitt, Managing
Director, Head of Navigantâs
Corporate Finance Practice
Navigant Consulting, Inc. (âNavigantâ)
NCIâs 2,500+ professionals maintain a presence in 45 cities internationally
throughout North America, Europe and Asia, including a significant concentration of
resources in Chicago, Houston, London, New York, and Washington DC.
13. Comprehensive Energy Complex Coverage
ī§ Commodity Hedge Funds
ī§ Energy Services
ī§ Energy Trading & Marketing
ī§ LNG
ī§ Oil and Gas - Upstream
ī§ Oil and Gas â Midstream
ī§ Power Generation, Transmission, & Distribution
ī§ Refined Products
ī§ Renewable Energy
14. Comprehensive Valuation Capabilities
We have valuation expertise across the range of structures. We commonly
value:
ī§ Investment grade debt
ī§ High yield and distressed debt
ī§ Complex securities
ī§ Hybrid securities
ī§ Common and preferred equity
ī§ Options, warrants & other derivatives
ī§ Partnership interests
ī§ Real estate and other tangible assets
ī§ Exotic options
ī§ Commodities and futures contracts
ī§ Interest rate and currency swaps
ī§ Earnouts and other contingent claims
ī§ Power Purchase Agreements
ī§ PIPEâs
ī§ Take or Pay contracts
ī§ Restricted stock
ī§ Oil and gas royalties
ī§ Mining interests
ī§ VPPâs
ī§ Intellectual property
ī§ IPR&D
ī§ Trade names
ī§ Goodwill
ī§ Customer relationship intangibles
ī§ Loan portfolios
ī§ Insurance reserves
ī§ Economic loss damages/lost profits
15. Our Strengths
ī§ Broad and deep expertise across the Energy Complex
ī We have consulting, banking, and corporate experience in diverse financial and commodity
markets, in addition to valuation & financial reporting technical capabilities. Our experienced
team includes MBAs, CPAs, CFAs, CBAs, ASAs, CAIAs, and MAIâs.
ī We are a one-stop shop, as we do complex commodity derivatives valuations alongside our
business and corporate valuation work.
ī§ Collaborative process
ī While our opinions are independent, you are involved throughout our process, because you
know your investments better than anyone. We want to understand your thinking, and we want
you to understand ours.
ī§ Thoroughness and accuracy
ī We give you more than just the conclusions. We give you thoroughly supported, accurate
valuation reports.
ī§ Integrity
ī We are only interested in getting to the right answer, employing generally accepted valuation
principles.
ī§ âTrusted Advisorâ to our clients
ī Our clients view us as business partners, working together to establish best practices in valuation
and transaction work as competitive advantages for their firms.
What makes Navigant unique?
16. Accepted in the Marketplace
ī§ Our work has supported KPMG, PwC, Deloitte, E&Y, BDO, GT, and other
audit firmsâ technical & audit staffs, undergoing detailed review of our fair
value analyses for financial reporting and tax purposes.
ī§ Our work has been reviewed and accepted by the SEC in numerous filings.
ī§ We have extensive experience defending our valuations before the IRS
(including Tax Court) and other tax and regulatory bodies.
ī§ Our senior professionals have performed technical reviews during their
tenure at the major accounting firms. We maintain continuing professional
relationships with current reviewers at these firms.
ī§ Our methodologies and findings have been presented to, and accepted by
numerous rating agencies, qualified institutional buyers and certified
investors.
ī§ Our professionals have published and spoken extensively on valuation
topics as they pertain to the investment community.
17. Trusted Advisor
Service
A combination ofâĻ..
âĻ resulting in a âTrusted Advisorâ relationship creating
valuation as a competitive advantage.
Flexibility
Collaboration
Accuracy
Thoroughness
Timeliness
Integrity
Expertise
18. âExcellent communicationâ
âVery responsive from a process and analysis standpointâ
âExceeds expectations in response time â
âInvestors have reached out to Navigant on methods and assumptions and have only
provided positive feedbackâ
âMeets all schedules and deadlinesâ
âProvides creative ideas and suggestionsâ
References available upon request
What our clients say about usâĻ.
19. Navigant vs. Big 4
ī§ We have a diverse skill set; not just CPAs,
ī§ We have corporate industry experience, they do not,
and
ī§ We are not limited by rules-based thinking and
checklists.
20. Navigant vs. Wall Street
ī§ We do not have trading and marketing desks, so we
can be more objective,
ī§ We understand regulatory and statutory valuation,
bankers sometimes do not, and
ī§ We get all of the accounting and tax rules that are
unique to the Energy Complex.
21. Navigant vs. Boutique Firms
ī§ Our balance sheet and brand stand behind our work,
ī§ We can deploy a wide variety of resources globally,
ī§ We do not have to outsource or sub-contract
anything, we are a one-stop shop, and
ī§ Small firms cannot be counted on to be there with
you through all of your regulatory challenges.
23. Resumes
Richard D. Hitt, Jr.
Managing Director
National Practice Leader
Navigant Consulting
30 South Wacker Drive
Suite 3100
Chicago, IL 60606
Cell: 312.953.7197
Tel: 312.583.2621
rhitt@navigant.com
Professional History
īˇ Navigant Consulting, Inc.
īˇ BearingPoint, Inc.
īˇ KPMG, LLP
Education
īˇ M.S.A., Eastern Michigan University
īˇ B.S., University of Michigan
Licenses & Certifications
īˇ Certified Public Accountant
Richard Hitt is a Managing Director and the Practice Leader for the Valuation & Financial Risk Management
practice of Navigant Consulting, Inc., based out of the Chicago office. He has more than 25 years of valuation and
financial advisory experience working with financial institutions and energy companies of all sizes.
In his current role at Navigant Consulting, Mr. Hitt oversees engagements governing acquisitions and sales of
banks and thrifts and is a leader in the firmâs efforts to develop and employ effective valuation and due diligence
techniques. His clients include some of the largest and best known financial service and energy corporations in
America, including Deutsche Bank, Bank of America, Bank of Montreal, KeyCorp, Charles Schwab, First Republic
Bank, E*Trade Financial Corp., NRG, LS Power, Primary Energy and Aquila.
Formerly a Managing Director of BearingPoint Incâs Valuation and Financial Services Advisory practice, Rick led
the development of a multi-faceted practice that focused on banks, thrifts, specialty finance and energy companies.
His experience includes financial advisory to community and regional banks, including due diligence, fairness
opinions, shareholder value analyses, merger and acquisition transactions as well as capital raising and investment
strategies. Prior to BearingPoint, Mr. Hitt was a partner in KPMGâs Valuation Services Practice.
Recent assignments Mr. Hitt has directed include:
âĸ Valued individually all the domestic and international electric generating facilities of a $5 billion utility for
asset-backed funding purposes. The project included separate valuations of the power contracts and
merchant plants.
âĸ Valued the domestic and international electric generating, electric and gas transmission and distribution
assets of a $4 billion utility for asset-backed funding purposes. The project also included valuing complex
electricity and natural gas derivatives.
âĸ Performed financial analyses for the domestic operations of a $10 billion utility for debt restructuring
purposes.
âĸ Rendered a fairness opinion to a Midwest life company as part of establishing a mutual holding company.
âĸ Rendered a fairness opinion to a retail self insurance fund related to an investment in a workers
compensation insurance company.
âĸ Provided SFAS 141 and 142 valuation assistance in the merger of two $150 billion US banks.
24. Thomas J. McNulty
Director
Navigant Consulting
909 Fannin St. Suite 1900
Houston, TX 7010
Tel: 713.646.5078
Cell: 832.472.3717
thomas.mcnulty@navigant.com
Professional History
īˇ Navigant Consulting, Inc.
īˇ Sirius Solutions LLP
īˇ Plains All American
īˇ Duke Energy
īˇ Enron International
īˇ US Foreign Service
īˇ Brown Brothers Harriman
Education
īˇ M.B.A. (Accounting & Finance),
Kellogg, Northwestern University
īˇ B.A. (History), Yale University
Tom McNulty is a Director in the Valuation & Financial Risk Management practice of Navigant Consulting,
Inc. His specialties are transaction and commercial analytics, valuation, and risk management. Specifically, his
practice offers clients a unique combination of strategic, financial, and transactional advisory services. Mr.
McNulty is based out of the Houston office, and he has more than 20 years of financial advisory and related
experience work.
As a consultant, Mr. McNulty has advised clients drawing on his valuation, transactions, risk management,
treasury and international credentials. Specifically, he has assisted with the valuation of securities, business
units, acquisition targets, derivatives, and equity incentive plans. In industry, and as an advisor, he has
worked on more than $38 billion in MD&A deals and has valued more than $8.5 billion notional in futures,
options, and other derivatives.
In his current role at Navigant Consulting, Mr. McNulty directs engagements governing acquisitions and
divestitures throughout the energy complex, including upstream oil & gas, midstream, merchant power,
renewable energy, energy services, trading and marketing, as well as LNG. He also performs valuation work
for clients with complex equity, fixed income, and commodity derivative instruments.
Recent assignments Mr. McNulty has led include:
âĸ Provided ASC 815 assistance to several energy companies related to their derivatives portfolios.
âĸ Rendered a comfort opinion to a energy hedge offering a new midstream oil & gas fund.
âĸ Rendered an opinion to an oilfield services company for a related party transaction.
âĸ Directed ASC 805 project for the reverse merger of two private drilling companies.
âĸ Provided ASC 718 valuation assistance to a publicly traded oilfield services company for its restricted stock
units and stock options.
âĸ Delivered ASC 718 valuation assistance to a privately held upstream oil & gas company for its equity
incentive plan.
âĸ Led the valuation work on the GP interest in a privately-held midstream company for a large litigation
engagement.
Resumes
25. Tom Houlihan
Director
Navigant Consulting
1180 Peachtree Street N.E.
Suite 1900
Atlanta, GA 30309
Tel: 404.602.5038
Cell: 404.849.1243
thomas.houlihan@navigant.com
Professional History
īˇ Navigant Consulting, Inc.
īˇ Intercontinental Exchange
īˇ Mirant Corporation
īˇ JC Bradford & Co
Associations and Licenses
īˇ FINRA Series 7 & 63
īˇ Candidate Member, American
Society of Appraisers
Education
īˇ MBA, Finance, Vanderbilt
īˇ BSBA Finance, Creighton
Thomas Houlihan is a Director in the Valuation & Financial Risk Management practice of Navigant
Consulting, Inc.
Mr. Houlihanâs principal focus is on valuation and advisory engagements related to the energy sector. In this
role, has provided clients with valuation consulting services for purposes including transaction due diligence,
fairness opinions, capital raising & investment strategy as well as litigation, tax and regulatory purposes. With
more than 16 years of valuation and financial advisory experience, Tom has provided valuation and
transaction assistance for client engagements involving some of the worldâs largest energy companies and
utilities, as well as midâsized companies, energy startâups and private investment funds.
Prior to joining Navigant Consulting, Tom held various roles in investment banking and corporate finance,
including senior positions in the debt capital markets division of JC Bradford & Co (now UBS Capital Markets)
and more recently in corporate development and asset management positions with Mirant Corp (Southern
Energy) and as Director of Finance and Strategy for Intercontinental Exchange (ICE).
Recent assignments Mr. Houlihan has directed include:
âĸ Fair Market Value of multiple nuclear power plants - Retained by a large investor owned utility to assist
with evaluating options with respect to the early buyout or termination of lease financings secured by
the companyâs interest in several nuclear power plants.
âĸ Valuation of a municipal waste-to-energy generation facilities to assist a client with evaluating lease
repurchase and financing options;
âĸ Acted as primary valuation advisor to support a clientâs effort to finance the $210 million purchase of 680
MW North American peaking facility. NCI provided the client with additional valuation services to
support the company with allocation of purchase price for financial reporting.
âĸ Performed the valuation of North American gas distribution system serving approximately 426 active
meters through approximately 11 miles of gas distribution mains. NCI provided an estimate of the fair
market value of the business to assist the clientâs effort to secure just compensation for the assets, which
were taken through condemnation proceedings.
âĸ Retained by a major investment bank to provide an estimate of the prospective fair market value of a of
1,161MW CCGT. The estimate of value was necessary for financial reporting purposes, including
disclosures related to residual value guarantees stipulated in lease finance transactions for the plant.
Resumes
26. Neeli Souli Kohan
Associate Director
Navigant Consulting
90 Park Avenue, 10th Floor
New York, NY 10016
Tel: 646-227-4654
Cell: 646-232-8855
Neeli.kohan@navigant.com
Professional History
īˇ Navigant Consulting, Inc.
īˇ Deloitte Financial Advisory Services
LLP
īˇ Overseas Shipholding Group
Education
īˇ M.B.A., Finance, Pace University
īˇ B.S., Accounting, Yeshiva University
Accreditation
īˇ Chartered Financial Analyst (CFA),
CFA Institute
īˇ Certified Public Accountant (CPA),
NY and NJ
īˇ Candidate, ASA
Neeli Kohan is an Associate Director in the Valuation & Financial Risk Management practice of Navigant
Consulting, Inc. Ms. Kohan is based out of the New York office.
Ms. Kohan has more than 16 years of experience in the valuation of public and private businesses, securities,
and intangible/tangible assets. She has performed valuations for purposes of financial reporting (including
Business Combinations, Goodwill and Long Lived Asset Impairment Testing for US GAAP and IFRS), Federal
tax, project financing, sale/leaseback transactions, M&A due diligence, and management information purposes.
Industries served include power generation, gas, electric, water and wastewater utilities, alternative energy
providers, private equity, media and entertainment, shipping and transportation.
Ms. Kohan is a Certified Public Accountant, a Chartered Financial Analyst and a candidate of the American
Society of Appraisers. She has a B.S. from Yeshiva University in Accounting and an M.B.A. from Pace
University in Finance. Prior to joining Navigant Consulting, Ms. Kohan was with the Valuation practice of
Deloitte Financial Advisory Services, LLP.
Resumes
28. Technical Upstream Services
Opportunity Screening and Evaluation
Strategic framework and prospect screening, detailed analysis, and project
execution planning.
Economic and Capital Program Valuation
Reserves valuation, economic assessments, post-installation appraisals, risk
analysis, and stochastic modeling.
Asset Exploration
Exploratory drilling, regulatory planning/administration, and environmental
agencies reporting.
Oil & Gas Asset Evaluation & Exploitation
Drilling, completion, testing, production initiation, operations execution, drill-
bit to sales project execution, regulatory planning, and administration.
Capital Project Design & Implementation
Infrastructure and production facilities development, planning and
scheduling, full field development, portfolio management, basic engineering
design, FEED, construction, procurement, PMO, engineering data
management, wastes management, and water management.
29. Technical Upstream Services contâd
Operations Management
Artificial lift methods, facility assessments, completion techniques and
design, subsurface assessment and configuration, cost and expense
management/efficiency, well integrity, real-time operations optimization,
and integrated operations.
Reserve & Reservoir Engineering
Reserves re-assessment, recovery enhancement & production
optimization, reservoir management, and infill programs.
Asset Management
Operating asset rationalization, asset integrity management, and
turnaround optimisation.
Data Management & Innovation
Subsurface data management & data flow optimization, real-time data
management, and digital oilfield rationalization and optimization.
30. Terry Manning
Liya Dossybieva is an upstream oil & gas professional with over 14 years of international experience in
hydrocarbons production operations, business strategy & transformation, investment & divestment
projects evaluations, business optimisation and continuous improvement. She is an expert in
optimisation of upstream operations, operational excellence, and integrated operations models. Liya
develops and leads delivery of strategic and business transformation initiatives and programmes with
the view to optimise production assetsâ efficiency, reduce operational costs, increase production levels,
and improve recovery. Liya will deliver data analysis and hypothesis creation for Clients.
Liya Dossybieva
Terry Manning, a Director in Navigantâs global Oil & Gas practice based in Houston, is an upstream oil
and gas professional with more than 35 years of practical execution and asset management experience.
He is an experienced practitioner in the areas of production optimization, streamlining operations,
reservoir management and portfolio rationalization, including well completions, reserve analysis and
managing oil and gas assets to improve profitability. Terry has relevant and specific work experience in
many of the producing basins in the United States and in Canada. He is a strong advocate that drilling
and completion program optimization originates from repeatable processes for effective and efficient
development planning and real-time implementation appraisal. Terryâs Houston location provides
direct access for North American client personnel.
Mike Dyson is a Director in Navigantâs global Oil & Gas practice. He brings 30+ years of experience in
the upstream oil and gas business, having worked at Shell and BG Group around the world. His core
expertise is in well and production operations, capital projects, supply chain strategies and new
technology development and implementation. He is focused on providing consulting advice to oil & gas
E&P companies looking to improve their business performance, and is a strong advocate of holistic and
sustainable improvement by tackling all elements of transformation. These include rigorous operations
planning and execution, collaborative working across the supply chain, application of new technology,
teamwork, communications and personal leadership.
Mike Dyson
Our Upstream Professionals