What is a Predictable Drop in Value?
A predictable drop in value occurs when an asset’s fair market value, based on qualified valuation metrics, is temporarily reduced due to factors like:
Lack of Liquidity
Transfer Restrictions
Control Limitations
Market Timing or Structuring Events
This lower valuation may not reflect the asset’s true earning power or long-term outlook, but it can be used strategically to lower the tax burden during a Roth conversion.
Have an Investment with a Predictable Drop in Value?
We're seeking investment offerings that align with our Discounted Rollover strategy.
If your deal includes a temporary, paper-based valuation discount, we’d love to connect and explore how we can feature it to an investor community.
What is a Predictable Drop in Value?
A predictable drop in value occurs when an asset’s fair market value, based on qualified valuation metrics, is temporarily reduced due to factors like:
Lack of Liquidity
Transfer Restrictions
Control Limitations
Market Timing or Structuring Events
This lower valuation may not reflect the asset’s true earning power or long-term outlook, but it can be used strategically to lower the tax burden during a Roth conversion.
Have an Investment with a Predictable Drop in Value?
We're seeking investment offerings that align with our Discounted Rollover strategy.
If your deal includes a temporary, paper-based valuation discount, we’d love to connect and explore how we can feature it to an investor community.
FAQs
What's a predictable drop in value and how does it apply to my offering?
A predictable drop in value refers to a temporary and supportable reduction in an asset’s fair market value, typically due to lack of cash flow, early-stage development, or limited liquidity. If your deal has a clear path to recovery and future income, it may qualify.
How can this strategy help raise capital for my deal?
Many investors hesitate to do Roth conversions because of the tax bill. When your deal qualifies for a discounted rollover, it allows investors to convert at a lower tax cost, which can make your offering significantly more attractive.
What kind of reporting or valuation is needed?
We coordinate a third-party valuation that meets IRS standards. You’ll need to provide key financials, projections, and deal structure details so the valuation firm can properly assess the temporary value drop and recovery potential.
What types of offerings are the best fit?
Deals in early development, heavy value-add real estate, or assets with delayed cash flow are often a strong fit. The key is a predictable recovery in value, with enough time for the asset to appreciate inside a Roth account.