Real time valuation estimates uncovered a 17% underwriting & insurance adjustment

The Challenge

A Mutual of Omaha client was interested in buying a restaurant from another individual and was seeking a loan from one of their partner banks.

The client wanted to help protect the succession with life insurance on the current owner and ensure they had a firm understanding of the restaurant's value. 

The client needed help identifying a potential range of value in order to:

• Understand what the acquisition may cost to inform loan underwriting
• Identify the amount of life insurance needed for the owner transition
  

The Solution

Using RISR, Mutual of Omaha was able to quickly provide an initial estimate of business value and show the client the key drivers behind the valuation. 

During a conversation between the client, the partner bank, and the Mutual of Omaha team, the status of the restaurant’s liquor license was brought into question.

The business was in a state that does not allow liquor licenses to transfer from one owner to a new one, and it is notoriously difficult to apply for and obtain a new one in less than two years within in the state. The client was unaware of this.

In real-time, the Mutual of Omaha team was able to model a scenario in RISR where the restaurant did not have a liquor license by adjusting the industry code used in the valuation.

The resulting valuation estimates were 17% lower than the initial estimate, uncovering a more accurate picture of the deal. 

The Results

By leveraging RISR’s real-time valuation capabilities, the Mutual of Omaha team was able to properly educate the client and more accurately inform loan underwriting and insurance coverage. 

Established a well-informed life insurance policy

Built deeper trust with the client by identifying a more accurate valuation

Strengthened partnership with banking partner by demonstrating value