Sherlock Company believes that the fiduciary duties of a not-for-profit firm contemplating conversion to for-profit status are analogous to the fiduciary duties of a for-profit contemplating a recapitalization or external financing. Therefore, conversions can and should be structured to fully honor the public benefit responsibilities and the capital market and operational responsibilities of the firm. Sherlock Company has the rare distinction of having assisted both a health plan contemplating conversion and regulatory authorities with the responsibility to review such transactions. Below we summarize examples of some of the projects that we have completed for our clients.
We assisted a health plan in its planned conversion to for-profit status and execution of the liquidity strategy of the resulting foundation. We created an approach for the firm to convert that fully honored the public benefit, avoided unfavorable accounting consequences and provided for flexibility in capital market transactions. We also provided various financial analyses of equity value and capital requirements, assisted in the preparation of materials submitted to regulators and conducted the search and competition for the selection of a securities underwriter.
Sherlock Company assisted a state's Attorney General in his evaluation of a health plan's proposed strategy of conversion. We reviewed the valuation of the converting plan, advised the Attorney General on structural issues relating to the conversion, analyzed the effect of the conversion on the company's competitive position and estimated the short and long-term impact of the terms of the proposed conversion transactions on the value to be received by the not-for-profit foundation in the form of preferred and common stock.
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