CORPORATE VALUATION SERVICES
CONVERTIBLE SECURITIES
Convertible debt is an instrument that gives the holder the right to convert the bond into a given number of shares of the issuing corporation at some time in the future. Closely held convertible debt is difficult to value because it is difficult to find publicly traded convertible debt that meets the conversion privileges and provisions of the closely held debt. One approach to valuing convertible debt is to separate it into it convertible and nonconvertible components: a nonconvertible debt security and a derivative of that security such as an option or warrant. In doing so, the appraiser can value each part separately and add the two together to arrive at a value for the convertible debt security.