Wednesday, September 22, 2010

Digital Deal Delivered for ABL

GoIndustry DoveBid Valuation Services was recently engaged by a specialist manufacturer of digital technology products. The brief was to provide them with Accounts Receivable and Inventory appraisals to assist the client in obtaining Asset Based Lending facilities.

The AR survey noted the ledger to be well maintained with a good ageing profile, although the customer concentration varied by month. Two issues were identified, deposits were taken in advance and staged billing during the manufacturing process.

The inventory comprised of components and work-in-progress (WIP) with an absence of finished goods. We learned that all WIP was against confirmed customer orders.

Through analysing the deposits received and understanding the billing structure, our specialist valuers were able to recommend monitoring covenants of the receivables to the respective lender. By completing a detailed analysis of the WIP inventory and by basing our Net Orderly Liquidation Value and exit strategy on conversion of the WIP to finished goods, we were able to fully evaluate the inventory value. This evaluation resulted in the Company receiving and accepting an offer of an accounts receivable and stock facility from an Asset Based Lender.

After the initial appraisal was completed a further take-on survey/appraisal was concluded to provide the lender with updated numbers. The update was completed, signed off and reported back to the client within two days of site work ensuring that the deal could go through credit.

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