Stout was engaged by a portfolio company to estimate the fair value of certain assets acquired in a business combination, whereby certain funds of other companies provided investments to help facilitate the purchase of the capital stock of our client. The engagement resulted in a change of control and necessitated acquisition accounting. Our client was a large pure-play castings manufacturer which produces highly engineered sand, investment, and directionally solidified/single crystal castings for the commercial aerospace, military, and energy markets.

As part of the engagement, Stout determined the fair value of personal property, real property, trade names and trademarks, developed technology, backlog, and customer relationships owned by our client. The customer relationship analyses required that we analyze each individual site’s commercial platforms in order to develop a reasonable assumption for a lifing curve based on the platforms’ economic lives. Furthermore, we performed an analysis of certain real property leases entered into by our client to determine the existence of favorable or unfavorable terms and the associated asset or liability, if any. While our client consists of multiple reporting units, they requested that our valuation ascribe the values of any applicable assets to the client’s 20 individual sites for internal reporting purposes. Thus, we performed our analysis at the site level and then allocated the resulting fair values among the reporting units. As part of this exercise, we also needed to allocate the overall transaction consideration to the reporting units, which we did through application of the discounted cash flow method.