Corporate Finance Services

Sherlock Company’s Value-Added in Corporate Finance and Valuation

Sherlock Company’s performance benchmarks, combined with decades of health plan financial advisory experience, yield superior analysis for corporate finance decisions. Our background is especially pertinent to health care firms that consider their strategies from a long-term perspective. Uniquely we believe, Sherlock Company provides the same disciplined approach in corporate finance assignments normally employed in a make or buy decision.

Central to any corporate finance decision is whether that decision maximizes the long-term value to its owners. While this often refers to the maximization of shareholder value, maximization can also be for the benefit of a business’ non-profit purposes.

Value can be estimated, according to John Maynard Keynes in his General Theory of Employment, Interest and Money as the product of speculation, “forecasting the psychology of the market” or of enterprise for the activity of “forecasting the prospective yield of assets over their whole life.” The former is achievable only through luck and the later is, through the Efficient Market Hypothesis, impossible without superior information.

Speculation is also problematic from a long-term perspective. As Keynes says with respect to the “proper social purpose (of investment markets) … (which is) to direct new investment into the most profitable channels in terms of future yield.” Keynes says that, “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.”

Thus, despite the challenges, firms who have considered their health plan operations as integral to their futures, and who have made a major commitment to these plans, favor the enterprise approach.

According to the Efficient Market Hypothesis, superior enterprise valuation requires superior information. Sherlock Company, through its SEER performance benchmarks, are not only superior, they are unique. Thus the application of our analyses can answer the following:

• To what degree are feasible strategies available to improve performance and, if so, how would such implementation improve value?
• Is an enterprise more valuable if it is sold, or is it more valuable if its operations can be improved in feasible ways?
• To what degree does scale create leverage in value? For instance, can growth, ceteris paribus, enhance margins and hence price per member valuation?
• What control premium should be expected for a health plan by its suitors?
• What will the effect of the sale of a health plan product line be on a health plan as a whole?

Thus, Sherlock Company can provide more than just valuation assistance. We can provide a global understanding of the financial and operational implications of each of your corporate finance strategies on the enterprise as a whole.