Westlake Securities provides boards of directors, investors and other fiduciaries with opinions on the fairness, from a financial perspective, of pending M&A or capital markets transactions. Our process involves conducting an in-depth analysis of the financing alternatives available to the company. We examine the consideration and the risks involved in a transaction, and we provide an independent and unbiased perspective on these facts to our clients. Our report combines experienced judgment of these deal-specific elements with a broad, data-driven market perspective in order to render a highly robust recommendation to fiduciaries.

As the result of changes initiated by both the Internal Revenue Service (IRC Section 409A) and the Financial Accounting Standards Board (FAS 123R) in regards to equity compensation of employees, private companies and their boards of directors have become increasingly cognizant of the need to use an outside appraiser for the purpose of establishing the value of common shares, restricted stock and common options.

Westlake Securities' successful track record of serving private companies as a corporate finance advisor means we have the credibility to present analysis which satisfies the Board, as well as the experience base to complete the valuation process in a manner that is respectful and efficient with company management time. While we can typically offer a more cost-effective alternative to national investment banking and valuation firms, our regular exposure to both the equity capital and M&A markets provides us with a better informed basis for our analysis of emerging growth companies than that of local valuation-only firms which are not active in the private capital markets.

In addition to conducting this service for several companies which are funded primarily by high net worth individual investors or original founding management teams, we have completed stock option valuations for portfolio companies of many of the leading venture capital funds active in the region, including:

The June 2001 adoption of SFAS 141 Business Combinations resulted in a shift in the way companies account for net assets or equity interests acquired in a business combination. Compliance with this statement requires the allocation of purchase value among specific acquired assets. In the past several years, auditors have increasingly recommended that acquiring companies utilize an independent valuation firm to determine the value of these specific assets when the overall acquisition is material to the financial statements of the buyer. Westlake Securities assists companies by providing independent fair value determinations of certain tangible and intangible assets acquired in transactions falling under the scope of SFAS 141.

The purchase price allocation process follows a two-step analysis. First, a valuation will determine the cost of the acquired interest by examining the transaction environment and form of execution. Methods employed include an analysis of transaction-related legal documents, modeling of contingent consideration arrangements, and valuation of non-marketable equity interests exchanged. Second, the cost of the acquired interest is allocated to the net assets assumed. This process, commonly referred to as a purchase price allocation, entails identification of assets and liabilities acquired, determining reasonable estimates of fair value, and allocating the cost of the acquired entity based on these estimates.

Relying on our thorough understanding of valuation theory and experience in mergers and acquisitions, we draw upon a portfolio of techniques widely-accepted in the valuation profession. Our analysis utilizes an objective combination of market-observed and internally-generated inputs, tailored to comply with all available guidance concerning fair value estimates in the context of financial reporting.

Our deliverable, which is comprised of a general transaction overview coupled with detailed asset-specific analyses, provides our clients with a reputable, independent source of fair value support for initiating their post-close purchase method accounting.