Using commercial share of wallet in private equity investments

• US 8,478,673 B2
• Filed: 08/12/2011
• Issued: 07/02/2013
• Est. Priority Date: 10/29/2004
• Status: Active Grant

• Current Assignee: American Express Travel Related Services Company, Inc. (American Express Company)
• Original Assignee: American Express Travel Related Services Company, Inc. (American Express Company)
• Inventors: Haggerty, Kathleen, Lyon, Charles Christopher, Okoh, Benedict O., Phelan, Robert E., Ruterman, Jon Kevin, Turner, Geraldine A., Yuan, Chao M., Biswas, Arnab
• Primary Examiner(s): Vezeris, James
• Assistant Examiner(s): BAIRD, EDWARD J
• Application Number:
  US13/209,035
• Publication Number:
  US 20110295768A1
• Time in Patent Office: 690 Days
• Field of Search: 705/35, 705/36.R, 705/38
• US Class Current: 705/35
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

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.

Claims

1. A method comprising:

modeling, by a financial analysis processor, industry spending patterns using individual corporate data and aggregate corporate data creating a model of industry spending patterns;

determining, by financial analysis processor, the total operating expenses of the company;

identifying, by the financial analysis processor, cardable operating expenses of the company from the total operating expenses of the company;

estimating, by the financial analysis processor, a commercial size of spending wallet of the company, based on, at least, the model of industry spending patterns, wherein the commercial size of spending wallet comprises the company'"'"'s cost of goods sold plus the cardable operating expenses of the company; and

outputting, by the financial analysis processor, the estimated commercial size of spending wallet.

2. The method of claim 1, further comprising developing a strategy for making a private equity investment in the company based on the commercial size of spending wallet of the company.

3. The method of claim 2, where the developing comprises deciding whether to make a private equity investment in the company.

4. The method of claim 2, where the developing comprises deciding whether to retain the company in a private equity portfolio.

5. The method of claim 2, where the developing comprises deciding whether to make additional investment in the company.

6. The method of claim 2, wherein the developing further comprises deciding how to structure the investment in the company.

7. The method of claim 1, further comprising using the commercial size of spending wallet of the company to corroborate other company data.

8. The method of claim 7, wherein the using comprises using the commercial size of spending wallet of the company to corroborate market data.

9. The method of claim 7, wherein the using comprises using the commercial size of spending wallet of the company to corroborate financial data.

10. The method of claim 7, wherein the using comprises using the commercial size of spending wallet of the company to corroborate industry data.

11. The method of claim 7, wherein the using comprises using the commercial size of spending wallet of the company to corroborate analyst data.

12. The method of claim 1, further comprising using the commercial size of spending wallet of the company to evaluate the company.

13. 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 of;

modeling, by the processor, industry spending patterns using individual corporate data and aggregate corporate data creating a model of industry spending patterns;

determining, by the processor, the total operating expenses of the company;

identifying, by the processor, cardable operating expenses of the company from the total operating expenses of the company;

estimating, by the processor, a commercial size of spending wallet of a company based on, at least, the model of industry spending patterns, wherein the commercial size of spending wallet comprises the company'"'"'s cost of goods sold plus the cardable operating expenses of the company; and

outputting, by the processor, the estimated commercial size of spending wallet.

14. The system of claim 13, further comprising developing a strategy for making a private equity investment in the company based on the commercial size of spending wallet of the company.

15. The system of claim 13, further comprising using the commercial size of spending wallet of the company to corroborate other company data.

16. The system of claim 13, further comprising using the commercial size of spending wallet of the company to evaluate the company.

17. A tangible, non-transitory computer readable 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 processor, industry spending patterns using individual corporate data and aggregate corporate data creating a model of industry spending patterns;

determining, by the processor, the total operating expenses of the company;

identifying, by the processor, cardable operating expenses of the company from the total operating expenses of the company;

estimating, by the processor, a commercial size of spending wallet of a company based on, at least, the model of industry spending patterns, wherein the commercial size of spending wallet comprises the company'"'"'s cost of goods sold plus the cardable operating expenses of the company; and

outputting, by the processor, the estimated commercial size of spending wallet.

18. The computer readable medium of claim 17, further comprising developing a strategy for making a private equity investment in the company based on the commercial size of spending wallet of the company.

19. The computer readable medium of claim 17, further comprising using the commercial size of spending wallet of the company to corroborate other company data.

20. The computer readable medium of claim 17, further comprising using the commercial size of spending wallet of the company to evaluate the company.