Company: ATLCL
Filing Date: 2025-02-25
Form Type: CORRESP
Source: 0001437749-25-005072
Chunk: 5

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-25
Form: CORRESP
Chunk 5
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 to the guidance under ASC 825-10-35-10-E and 35-11A (although specifically written for non-financial assets), valuation assumptions should include complementary assets or liabilities of a purchaser even if they are not specifically included as part of the unit of account. As a result, we believe that we also should include in our fair value models the ability of acquirers to offer consumers access to similar products and credit access as complementary assets. Further, we do not believe that a market exists in which we could sell the portfolio of receivables, and both retain our access to these consumers’ subsequent purchases and restrict the acquirer’s access to the customers (other than through the sale of a participating interest which would not meet the highest and best use criteria). As a result, this customer access is non-separable from the underlying asset and should be included in the valuation and considered as part of the value inherent in the underlying unit of account.

Company Response:

Subsequent purchases by consumers are an intrinsic part of the overall model valuation and the ongoing utility they provide to consumers has a dramatic impact on payment behavior. As a result, it is difficult to determine the fair value of subsequent purchases in isolation due to the impacts they have on existing payment behavior. When calculating fair value on a “with and without” basis (with or without subsequent purchases with no other changes in assumptions), we tend to see a slight increase in the overall value of the existing portfolio (versus what was disclosed) with a diminished value associated with the subsequent purchases. The relative timing of cash flows (via the payment rate) is a key driver in our discounted cash flow analysis and drives this result. Without the additional funding of principal purchases in the model (which typically reduces the near term net cash flow used in our fair value models), payments applied directly to outstanding balances increase. This, in turn, decreases the time it takes to recover cash and increases the present value of the existing receivable. We do not believe this would be an appropriate way to model the receivables as it would be contrary to observed market practice and would not be reflective of what we believe would be achievable in a market transaction. In any event, we do not believe it would result in a material shift in the overall valuation other than to create a slight increase in the valuation.

| 7. | We note your response to prior comment 1 and that you include expected subsequent merchant fees in your fair value measurement for receivables. Please tell us how you considered whether your contractual right to