Brattle Experts Examine Software Company Valuations and Restructuring in the Age of AI
In a new article published by the American Bankruptcy Institute Journal, Brattle Principals Farooq Javed and David Plastino, along with Senior Research Analyst Audrey Xu, examine the factors affecting software company valuations and present a framework for bankruptcy and restructuring professionals to evaluate restructuring alternatives.
The article, “The Perfect Storm: Software Valuation and Restructuring in the Age of AI,” highlights the impact of slower growth, weaker customer retention, and higher costs of capital on software companies. The authors provide an analytical framework, rooted in cash-flow analysis, to help struggling companies develop a credible value preservation plan.
Most software companies are currently operating with capital structures that do not reflect their financial reality. The proposed framework examines company performance and cash-flow generation potential to evaluate a range of realistically achievable outcomes and appropriate restructuring alternatives.
Other key findings from the article include:
- Software companies are facing slower growth, increased competition, and reduced access to capital.
- The emergence of AI has significantly increased competition in the software industry.
- Restructuring plans depend heavily on the details and circumstances of each company.
The full article is available on the journal’s website.
