Solvency Opinions

Prairie utilizes its deep valuation and transaction advisory expertise to provide solvency opinions to boards of directors, special committees, trustees, lending institutions, and private-equity sponsors.  our opinions can help fiduciaries understand the impacts of a highly leveraged transaction and avoid claims of fraudulent conveyance or other illegal transactions

What We Do

When is a Solvency Opinion Required?

  • Leveraged Buy-outs
  • Dividend Recapitalizations
  • Debt Refinancing
  • Divestitures
  • Corporate Restructuring

For solvency, the company must pass 3 tests

Test 1. Balance Sheet Test

Does the fair value of the company assets (including intangible assets) exceed its fair value of current and contingent liabilities after the proposed transaction?

Test 2. Cash Flow Test

Can the company meet its debt obligations as they become absolute and mature after the proposed transaction? This analysis should include “stress” tests to determine impacts of a business downturn

Test 3. Capital Test

Does the company have an unreasonably small amount of capital for the business after the proposed transaction? Can the company meet its operating expense, capital expenditure, and debt obligations?

Contact Us

Middle - Market Focus

Middle - Market Focus

Prairie Capital Advisors is dedicated to serving the investment banking and financial advisory needs of middle - market business owners

Ownership Transition

Ownership Transition

A successful transition needs a well-thought- out strategy. We will help define, shape, and implement a plan that meets your short-term and long-term objectives

Corporate Growth

Corporate Growth

Build or buy? It could be both. Prairie Capital Advisor’s strong relationships with debt and equity capital sources will help you realize your corporate growth strategies

Business Sustainability

Business Sustainability

Sustainability requires strategies that grow the enterprise and minimize risks. Prairie advises companies on strategies that result in long-term shareholder value