Solvency Opinion Services
Foxboro Consulting Group, Inc.’s (“FCGI”) independent status is valuable than in rendering solvency opinions.
Corporate mergers, acquisitions, sales and refinancing are subject to the scrutiny of lenders, stockholders, regulators and the IRS. Only an independent valuation firm like Foxboro Consulting Group, Inc. can provide an opinion concerning a company’s ability to remain solvent, to the satisfaction of lenders, shareholders, regulators and the courts.
Solvency opinions confirm that a company remains solvent after an acquisition, merger or other corporate transaction requiring debt financing.
Should bankruptcy occur later, an independent solvency opinion by Foxboro Consulting Group, Inc. can protect secured lenders, boards of directors and advisors from liability in fraudulent conveyance claims.
In connection with many solvency opinions, the board of directors requires a Dividend Distribution Test to attest to the fact that the proposed dividend or distribution is not out of stated capital. FCGI’s consultants test that the value of the company assets, less its stated and contingent liabilities, exceeds the value of the proposed distribution plus the stated capital of the company. In some states the Dividend Distribution Test alone will suffice to meet the fiduciary responsibility of the board of directors, while in other states, the three tests of solvency are also required.
To determine solvency, Foxboro Consulting Group, Inc. consultants conduct a detailed analysis of the company, the proposed transaction and financial projections. The solvency opinion comprises the results of three tests:
- Balance Sheet Test:
- The fair value and present fair saleable value of a company’s assets exceeds its stated and identified contingent liabilities.
- Cash Flow Test:
- After the proposed transaction, the company would be able to pay its debts, including identified contingent liabilities, as they mature.
- Reasonable Capital Test:
- The capital remaining in the company would be a reasonable amount for the business in which it is engaged and proposes to be engaged.
Foxboro Consulting Group, Inc. and its professionals have competed in their industry in developing and applying the accepted analytical approach for solvency opinions.