Andersen Group Inc. (ANDG) stock intrinsic value fair value estimate & owner earnings analysis

Andersen Group is the US member firm of the Andersen brand: about 2,000-plus professionals in 26 US offices selling tax advice (private client tax about half of revenue, business tax about 35%, alternative investment fund tax about 9%) and valuation services (5%). Revenue was $639M in 2023, $732M in 2024 and $839M in 2025, growing about 14.5% a year as it added Managing Directors and client groups (over 12,350 in 2025), and was up about 19% in the first half of 2026. It went public in December 2025 through an 'Up-C' structure: public holders own Class A shares, while the Managing Directors own about 98 million of the roughly 112 million economic units through a holding vehicle and can exchange them for shares. Earnings level. Reported 2025 results show a $130M loss, but that loss is almost entirely non-cash IPO accounting: $193M of one-time 'equity restructuring' charges and $147M of equity compensation, nearly all of it for profit-interest units and Class X units that are already counted in the 112 million unit total. We count every unit as a share and do not also deduct the expense for those same units, which would charge the dilution twice. We do deduct ongoing equity pay for new restricted stock units and new Managing Director grants, roughly $20M a year. Cash earnings before tax, built from operating cash flow after removing working-capital swings and maintenance capital spending, were about $119M in 2023, $137M in 2024 and $197M in 2025. The 2025 jump is real but needs explaining: during 2025 the partners began receiving more of their pay as a share of profits through their units instead of as salary, so cash cost of services fell from 63% to 57% of revenue. That shift is permanent under the new structure, and the first half of 2026 confirms it: operating cash before working-capital timing and interest was about $129M versus about $77M a year earlier. We therefore anchor on the post-restructuring level of about $175M before tax (2025's $197M less ongoing equity pay), not the older, lower years, which describe a business that paid its partners differently. Because the company was a tax-transparent partnership until the IPO, none of those historical numbers bear corporate income tax; we charge a full 25% tax rate in every case. The tax receivable agreement gives 85% of any tax savings from unit exchanges back to the former partners (estimated at about $695M over 15 years), so we credit none of those tax savings to shareholders. Debt. At June 30, 2026 the company owed $301M on subordinated notes issued to its former partners in the reorganization (Capital Account Notes at 6.3%-7.5% and a Holdover Note at 7.63% for retired partners), amortizing roughly $45M-$62M a year through 2033. Against that it held $176M of cash, of which we treat about $50M as needed for operations given strong seasonality, and a tax receivable agreement liability of about $35M is on the books. Net debt is therefore about $210M, or roughly $1.90 per share. The notes cost close to 6%, so no adjustment for their rate. Business cash flow covers interest of about $20M a year many times over in every case. Base case. Growth continues from the demonstrated engine of adding Managing Directors and clients, but below the 14.5% the business has actually sustained: 10% in 2027 tapering to 2% by year ten, then flat, since nothing in the filings evidences growth beyond that. Business worth about $3.5B, less $0.21B net debt, leaves about $29 per share. Bear case. A professional-services downturn like 2008-2010, when tax and advisory firms saw fee volumes fall as private-equity deal activity, fund launches and wealthy-client transactions dried up; the alternative investment fund and private client lines are directly exposed. With largely fixed staff costs, cash earnings fall 30% then a further 10%, recover slowly, and then fade 2% a year after year ten as the key-person risk named in the filings (CEO Mark Vorsatz) and partner departures erode the client base. Business worth about $1.5B, less $0.21B net debt, leaves about $11 per share. Bull case. The partner-hiring engine keeps running near its demonstrated pace: 14% growth for two years tapering to 4% by year ten, flat thereafter. Business worth about $4.7B, less $0.21B net debt, leaves about $40 per share. We did not credit margin expansion, new service lines or international expansion, none of which is in hand. What could be wrong. First, the earnings level depends on the partners accepting profit allocations through their units instead of salary for good; if retention pressure forces cash pay back up, the level falls toward the 2024 figure of $137M, worth roughly $20 per share. Second, the unvested Class X units ($709M of cost to be recognized over about 4.7 years) only vest if partners stay; departures in a professional firm take clients with them. Third, the annual 5% evergreen in the equity plan could dilute faster than we assume. Controlling votes sit with the partners' holding vehicle, so outside shareholders have little say. Margin-of-safety price. We are fairly confident in the revenue and the cash-generating level, with two corroborating quarters behind the new structure, but the history is short and the structure is complicated. The worst plausible outcome is a deal and wealth-driven downturn combined with partner defections; the business has little debt, no customer concentration and no regulator dependence, so it survives that, but shareholders would be left near the bear value. After tax, the business earns about $1.17 per share today and has grown faster than 10% a year; at $12 that is roughly a 10% cash yield plus high-single-digit growth, which implies a 20% annual return within a few years in the base path and avoids a large loss in the bear path, while the business pays down its partner notes in the meantime. The margin-of-safety price is $12; above that, the bear case would leave too little margin for the things we are most likely to have wrong. Previous figures for this company were prepared on a different basis and are not comparable.