I would like to get some insights on a divorce valuation (J.V break up). Some of you can provide more insight on this. How to approach it? How many scenarios are required? What methods? etc.
What does " J.V break up" mean and what state do you live in and is this for your divorce?
Joint Venture I think.
Joey, two companies had a J.V and one was providing the technology (A) and the other (B) was manufacturing products based on that technology. 50/50 partnership. The J.V was about to go public. A stopped providing the technology due to some internal issues (which can’t be disclosed). Without the technology, no new products or extension of the existing products, that had good market penetration, therefore no IPO. B is suing A. B wants to know how much loss it has incurred due to this situation. Possible scenarios such as new products, extension of existing products, IPO value, premium etc For example loss may be calculated using scenarios such as: 1. Difference between book value (residual value) and IPO value 2. Difference between market value of the facility and value based FCFF if new products and extension of existing products I have come up with couple of scenarios like this. But I would like to get others opinion about different scenarios. By the way, my g/f was about to leave when I was preparing for the exam. Complaint was no time was for her after work and CFA preparation. Similar situation faced by many CFA candidates
Was there anything in the joint venture agreement about termination penalties, etc.?
Not specifically. This happened in an emerging market. The condition was A can’t operate directly in that market if A breaks the J.V. In addition, the J.V agreement was for 10 years and A provided the technology for 6 years