I wrote this article on April 20, 2022.

xNY.io - Bank.org finds this helpful:

"While firms are raising capital, exploring a merger/acquisition or in the process of going public, CFO.com underscores value in engaging ligation finance tools to maximize valuation."

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Generally accepted accounting principles (GAAP) call for litigation expenses to be accounted for during month/quarter of incurrence. Similarly, GAAP holds future recoveries vacant on the balance sheet until award(s) are recovered, oftentimes years in the future. For companies self funding meritorious litigation, application of GAAP may produce a balance sheet that undervalues the firm’s worth. CFO.com suggests that maneuvering costs off balance sheet via litigation finance products and services is potentially a smart idea.  

CFO.com reports that with the bespoke nature of litigation investment agreements, chief financial officers are able to arrange scenarios to meet cash flow constraints. Corporate recovery, or affirmative action, can be a useful strategy for companies who develop a portfolio of pursuable claims. 

According to CFO.com, litigation finance allows firms to effectively boost net income line items on the balance sheet. More importantly, utilization of litigation investment vehicles drive the ability to pursue claims that normally would be avoided due to cost restrictions. 

While firms are raising capital, exploring a merger/acquisition or in the process of going public, CFO.com underscores value in engaging ligation finance tools to maximize valuation.