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Category: Business Valuations

Why your customer health scores aren’t actionable for predicting retention

Why your customer health scores aren’t actionable for predicting retention

Key considerations for companies seeking a more predictive model to assess customer health

Key takeaways

  • Customer success functions, and the account health scores they create, are in the spotlight.
  • Health scores often focus on what is easy to measure, not what provides actionable insight into accounts.
  • Tech companies looking to use health scores to guide their decisions need to build that data on a more solid foundation.

Health scores should be derived from a balance of qualitative and quantitative data

In a subscription economy, the revenue focus of many technology companies has shifted from closing new deals to renewing subscription contracts and expanding sales among existing customers in order to continually grow accounts. Understanding how likely an account is to renew has become a core focus of company financials, making customer retention a hot topic. As a result, customer success functions, and the account health scores they create, are in the spotlight.

As these customer health scores become increasingly strategic, many companies are realizing their current approach to calculating them leaves a lot to be desired—that was the topic of a recent Technology & Services Industry Association webinar sponsored by RSM US LLP. Health scores often focus on what is easy to measure, not what provides actionable insight into accounts, according to the TSIA, which has developed benchmarks to help tech companies more accurately measure customer health.

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TRUIST Perspective: Rising yield and less Fed accommodation to inject volatility but history suggests primary market trend remains higher

TRUIST Perspective: Rising yield and less Fed accommodation to inject volatility but history suggests primary market trend remains higher

January 6, 2022

What happened?

After a strong start to the year, volatility in markets has risen. Investors appear concerned that the Federal Reserve (Fed) may reduce policy accommodation at a faster rate than previously expected. At the same time, the 10-year U.S. Treasury yield has jumped from a low of 1.35% in late December to above 1.70% for the first time since April 2021.

Our take

A shift in Fed policy often injects volatility into markets. Indeed, this is one of the key points we discussed in our 2022 outlook and is a reason behind why we are looking for more moderate market returns and more normal pullbacks.

That said, stocks have generally had positive performance during periods where the Fed is raising short-term rates because this is normally paired with a healthy economy. A growing economy supports corporate profit growth, which supports the stock market.

Moreover, with U.S. GDP output above pre-pandemic levels, annual job gains in 2021 at a record level, and inflation well above average, it’s hard to justify maximum monetary policy accommodation when the economy is no longer in crisis.

However, it will be a long time before one could argue that Fed policy is restrictive, especially when one considers that yields after inflation, known as real yields, remain in deeply-negative territory. This stands in sharp contrast to 2018, when markets had a sharp selloff late in the year when real yields were slightly positive and investors were concerned the Fed was becoming too aggressive.

Notably, stocks have risen at an average annualized rate of 9% during the 12 Fed rate hike cycles since the 1950s and showed positive returns in 11 of those instances. The one exception was the 1972-1974 period, which coincided with the 1973-1975 recession. Our work suggests near-term recession risks remain low.

Likewise, stocks have generally risen during periods of rising 10-year U.S. Treasury yields. In a study of 15 periods where intermediate rates rose by at least 1.5 percentage points since 1950, stocks averaged an annualized gain of 12%. The exceptions have coincided with recessions or economic slowdowns.

Importantly, intermediate-term rates are only back to pre-pandemic levels. This is certainly justified in our view given the aforementioned economic and inflation backdrop. It’s also consistent with our fixed income team’s outlook for higher rates and higher volatility.

Even with the recent rise in 10-year yields and stocks, the equity risk premium, a metric that compares the valuation of stocks to bonds, remains at a level that has historically corresponded with stocks outperforming bonds on a 12-month basis by an average of almost 11%. Accordingly, we do not see the current level of the 10-year U.S. Treasury yield as a significant threat to the bull market.

To read the publication in its entirety, please Download PDF

Keith Lerner, CFA, CMT

Co-Chief Investment Officer
Chief Market Strategist
Truist Advisory Services, Inc.

Shelly Simpson, CFA, CAIA

Senior Investment Strategy Analyst
Portfolio & Market Strategy
Truist Advisory Services, Inc.

Bespoke Cross-border Solutions By FON Valuation Advisory

Bespoke Cross-border Solutions By FON Valuation Advisory

Companies and individuals entrust FON Valuation Advisory with their unique needs throughout the transaction continuum. The experience of our professionals means that we are able to offer our clients bespoke solutions based on proven techniques and deep industry knowledge. FON Valuation Advisory’s ability to work with our clients on all forms of transactions worldwide sets us apart from our peers.


Client Profile

Our client (“Client”) is a publicly listed, multinational company providing critical components for IoT (Internet of Things) intelligence.



Establish an overseas subsidiary in a new key market (“NewCo”) vis-à-vis execution of a global tax strategy that involves multiple countries and the need to manage foreign currency exposure.


Our Role

During Phase I of the engagement, the FON Valuation Advisory team valued intercompany loans with an aggregate fair market value in excess of $500 million. The valuation process involved the estimation of the appropriate current market rates to apply to each tranche of the intercompany loans. Our views on current market rates were informed by synthetic credit ratings the valuation team developed through rigorous company and financial analysis, which were then benchmarked against yields on publicly-traded debt issuances of companies from comparable industries with similar terms and features. The loans are held by a subsidiary of the Client (originally issued in connection with an acquisition of a NASDAQ-listed entity) and subsequently reassigned to Newco, as in-kind capital contribution.


Phase II of the engagement involved the determination of a foreign exchange hedging strategy to manage NewCo’s exposure to foreign exchange currency fluctuations of future periodic interest payments and principal repayments. In collaboration with the Client and its advisors, our team assisted in the establishment of a foreign exchange hedging strategy that involves four countries on both sides of the Atlantic and features zero cost collars using corresponding foreign exchange option contracts. (A zero cost collar is a form of options strategy designed to protect existing long positions with little or no cost since the premium paid for the protective puts is offset by the premiums received for writing the covered calls.) Our team also assisted in the determination of the arm’s-length settlement payments and required margin levels of the hedge counterparties.



The Client successfully executed the series of transactions to meet its stated objectives. The analyses prepared by the FON Valuation Advisory team were reviewed and accepted by NewCo’s statutory audit firm.


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FON is a financial advisory firm dedicated to investment banking, valuation advisory, management consulting, and principal investing across the aerospace, defense, and government services industries. As current and former members of regulatory and standard-setting organizations, FON Valuation Advisory practice provides services informed by decades of experience. In advising high-net-worth individuals, public and private companies, equity and debt investors, transaction advisors, compliance and regulatory agencies, and state and federal courts, our professionals approach each mandate with an appreciation of its unique requirements and challenges. We have performed valuations of assets and business interests throughout the Americas, Europe, Middle East and Africa, and Asia/Pacific.

Posted by
Jouky Chang
Author Bio
Jouky Chang serves as Managing Director and Practice Leader of FON Valuation Advisory. Jouky has more than 20 years of experience in the valuation of business interests and intangible assets for a variety of accounting, tax and other corporate related matters. He has prepared such valuations for purposes of business combinations, impairment testing, acquisitions and divestitures, fairness opinions, federal and state tax planning, estate and gift tax planning, litigation involving shareholder disputes, bankruptcy reorganizations, etc.
Facing the challenge of conducting business valuations in a pandemic

Facing the challenge of conducting business valuations in a pandemic

Valuation in the Midst of a Pandemic

FON Valuation Services provides some observations that outline the challenges one should expect with valuation assignments during the pandemic-era.

In a year dominated by the novel coronavirus, most aspects of everyday life have had to be reimagined. Figuring out the “new normal” in a constantly shifting landscape is part of the daily routine. During the global pause, as countries around the world instituted quarantine measures, deal making activity fell predictably in the first half. Numerous studies have documented the drop in global M&A activity, including a July 2020 alert from White & Case which cited a 53% and 32% decline in total value of and volume of deals announced in 1H 2020 compared to the prior year, respectively. 1

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