There's a business opportunity around every corner and knowing how to value this opportunity when others do not.
For example,
Lawsuit Funding is a firm that provides financial help and relief to people who have previously been involved in a lawsuit. These people come from all backgrounds and have all have very different stories but they are bound by similar needs.
When a person is granted a settlement in a legal case, they typically receive a series of payments over time. However, in many cases, those individuals need access to the cash immediately and they are out of luck under the typical ruling. If provided cash upfront they could use the funds to make a downpayment on a house, pay for college, or even buy a business.
Lawsuit Funding will analyze the settlement stream and determine the value of the payout. The figure is what is known as a net present value calculation and they then offer a lump-sum payment that is a percentage less than that calculation. The difference in the two numbers is their profit.
Note that if Lawsuit Funding were to offer the same value as their net value calculation, they would make zero profit. It would be a similar case to a scenario in which a homebuilder were to sell the houses he built exactly at cost. I mention this because occasionally people get bent out of shape that time value of money businesses charge high fees. It's absurd because in our capitalistic system, competition will erode high profits. The more competition, the better the prices.
It is important to keep in mind that firms that buy and sell settlements do so at considerable risk. Every calculation of a net present value is based on assumption about future interest rates and if you miscalculate future interest rates you may lose money.
The business of lawsuit funding is not for the faint of heart and has considerable risks if not executed properly.
For more information please contact:
Lawsuit Funding
