Using commercial share of wallet in private equity investments

Abstract

Commercial size of spending wallet (“CSoSW”) is the total business spend of a business including cash but excluding bartered items. Commercial share of wallet (“CSoW”) is the portion of the spending wallet that is captured by a particular financial company. A modeling approach utilizes various data sources to provide outputs that describe a company's spend capacity. Private equity firms and other investors of small businesses can use the CSoW/CSoSW modeling approach to more accurately evaluate small and privately held companies, both during investment and for evaluating prospective investments. Over-the-counter securities trading systems can also use this modeling approach to provide more accurate information and/or rankings of listed companies to their customers.

We claim: 
     
         1 . A method comprising:
 modeling, by a financial analysis computer-based system, to create a model of industry spending patterns, wherein the computer-based system comprises a processor and a tangible, non-transitory memory;   estimating, by the computer-based system, a commercial size of spending wallet of the company, wherein the commercial size of spending wallet comprises the company's cost of goods sold plus cardable operating expenses of the company, and wherein the cardable operating expenses of the company are identified from total operating expenses of the company; and   outputting, by the computer-based system, the estimated commercial size of spending wallet.   
     
     
         2 . The method of  claim 1 , wherein the modeling further comprises modeling industry spending patterns. 
     
     
         3 . The method of  claim 1 , wherein the modeling further comprises modeling industry spending patterns using at least one of individual corporate data and aggregate corporate data. 
     
     
         4 . The method of  claim 1 , wherein the modeling further comprises modeling industry spending patterns using individual corporate data and aggregate corporate data. 
     
     
         5 . The method of  claim 1 , further comprising developing a strategy for a private equity investment in the company based on the commercial size of spending wallet of the company. 
     
     
         6 . The method of  claim 5 , where the developing comprises deciding whether to make a private equity investment in the company. 
     
     
         7 . The method of  claim 5 , where the developing comprises deciding whether to retain the company in a private equity portfolio. 
     
     
         8 . The method of  claim 5 , where the developing comprises deciding whether to make additional investment in the company. 
     
     
         9 . The method of  claim 5 , wherein the developing further comprises deciding how to structure the investment in the company. 
     
     
         10 . The method of  claim 1 , further comprising using the commercial size of spending wallet of the company to corroborate other company data. 
     
     
         11 . The method of  claim 10 , wherein the using comprises using the commercial size of spending wallet of the company to corroborate market data. 
     
     
         12 . The method of  claim 10 , wherein the using comprises using the commercial size of spending wallet of the company to corroborate financial data. 
     
     
         13 . The method of  claim 10 , wherein the using comprises using the commercial size of spending wallet of the company to corroborate industry data. 
     
     
         14 . The method of  claim 10 , wherein the using comprises using the commercial size of spending wallet of the company to corroborate analyst data. 
     
     
         15 . The method of  claim 1 , further comprising using the commercial size of spending wallet of the company to evaluate the company. 
     
     
         16 . The method of  claim 1 , wherein the estimating is based on, at least, a model of industry spending patterns. 
     
     
         17 . The method of  claim 1 , further comprising determining, by the computer-based system, the total operating expenses of the company. 
     
     
         18 . The method of  claim 1 , further comprising identifying, by the computer-based system, the cardable operating expenses of the company from the total operating expenses of the company. 
     
     
         19 . A system comprising:
 a processor for estimating spending capacity of a company;   a tangible, non-transitory memory communicating with the processor, the tangible, non-transitory memory having instructions stored thereon that, in response to execution by the processor, cause the processor to perform operations;   a modeling module in communication with the processor and configured to create a model of industry spending patterns, wherein the computer-based system comprises a processor and a tangible, non-transitory memory;   an estimating module in communication with the processor and configured to estimate a commercial size of spending wallet of the company, wherein the commercial size of spending wallet comprises the company's cost of goods sold plus cardable operating expenses of the company, and wherein the cardable operating expenses of the company are identified from total operating expenses of the company; and   an output module in communication with the processor and configured to output the estimated commercial size of spending wallet.   
     
     
         20 . A tangible, non-transitory computer readable storage medium comprising instructions stored thereon that, in response to execution by a processor for estimating spending capacity of a company, cause the processor to perform operations of:
 modeling, by the computer-based system, to create a model of industry spending patterns, wherein the computer-based system comprises a processor and a tangible, non-transitory memory;   estimating, by the computer-based system, a commercial size of spending wallet of the company, wherein the commercial size of spending wallet comprises the company's cost of goods sold plus cardable operating expenses of the company, and wherein the cardable operating expenses of the company are identified from total operating expenses of the company; and   outputting, by the computer-based system, the estimated commercial size of spending wallet.