CapStruc Advisors, LLC takes a unique approach to discovering the value of productive or potentially productive assets, including commercial, industrial, and multi-family real estate, machinery and equipment, and intangible assets. The unique approach involves viewing these assets primarily as factors of production. The advantage of this approach is that it provides a comprehensive theoretical framework in which the value of each asset can be put into context. This ensures highly defensible, accurate value conclusions that rest on a foundation of more than 130 years of coordinated economic theory.
This approach is fruitful in all valuation assignments, but is particularly helpful in discovering the value assets where the highest and best use is in question. Highest and best use is a term used by valuation professionals to refer to the reasonably probable and legal use of an asset that is physically possible, appropriately supported, and financially feasible and that results in the highest value. At any given time, there are many assets that are not being put to their most productive use.Examples include old manufacturing plants that have been vacated and duplicate assets that one company acquired from another but that don’t fit into the production plans of the resulting merged or parent company.
Many valuation professionals gloss over this issue, more or less assuming that the current use of a property is its highest and best use. CapStruc Advisors, LLC always gives careful consideration to this issue, identifying the general highest and best use in most cases and sometimes even identifying specific buyers for an asset that is not as productive as it could be in the current production process. This is particularly important in the current economy, where many investments have been misdirected.Putting the resulting non-productive assets back in to productive use, with as little loss as possible, is the most urgent challenge that the business world now faces.
The theoretical framework is what is known as the Austrian school of economics. This is a vast body of knowledge that begins with the most fundamental aspects of human action and proceeds to explain the entire economic system based on axiomatic principles. In this system, there are no contradictions between, for example, labor economics and the theory of the firm. Within this framework, the theory of the structure of production (or capital structure) and the pricing of the factors of production are fully integrated with everything from direct exchange (or barter) to monetary theory.
The approach is useful in combating the confused environment of today’s valuation profession. Most professional valuation firms rely on a confusing combination of several economic theories, including the neo-classical and neo-Keynesian theories. By focusing on one comprehensive theory, CapStruc seeks to clear up this confusion. The integrated approach is useful for valuations involving legal disputes, proper asset accounting, and asset-backed financing. In fact, economists using this approach unambiguously predicted the current crisis, and explained its causes, as far back as 2003.
We hope that you'll join us on our journey as we explain and continue to explore the practical applications of capital structure theory. Please visit our articles page for interesting and informative articles. Please return to this site as we add useful and enlightening content.
