With investors favoring dividend-paying funds amid equity market volatility, we examined the role of dividends in bank shareholder returns over the past decade. While dividends made up a significant portion of total returns, especially in a middling decade for bank stocks, our analysis shows they are not the sole driver. Long-term shareholder value is still rooted in growing earnings and book value—even in uncertain times.
After years of booming mortgage profits driven by ultra-low rates, the industry has faced a prolonged slump amid stubbornly high mortgage rates and weakened housing demand. Despite rate cuts by the Fed, affordability remains strained, and mortgage volumes lag forecasts. However, transaction volume is expected to pick up despite high rates while home prices remain flattish, which should serve to boost mortgage originations. Major moves by Rocket Companies, including acquisitions of Redfin and Mr. Cooper, hint that the worst may be over and a recovery in mortgage banking could be taking shape.
A recent $45 million settlement between UPS and the SEC over allegedly flawed goodwill impairment tests and earnings overstatements puts a spotlight on the goodwill impairment testing process. Whether it be market volatility, uncertainty around tariffs, or simply poor performance at a reporting unit (as was the case for UPS), proper evaluation of goodwill impairment testing inputs is critical to getting the process and numbers right and potentially avoiding a fine. The impairment charge in this case may have been a non-cash item but the civil penalty was a real expense.
In this article we explore how fund principals in private equity, venture capital, and hedge funds earn a share of profits—known as carried interest—when performance exceeds benchmarks. The article breaks down fund structures, highlights valuation challenges, and emphasizes the need for experienced appraisers to navigate the complexities involved in assessing these interests.
What is driving the future of the medical device industry? From powerful demographic shifts to technological innovation and global market expansion, we discuss five key trends that are reshaping the landscape in 2025 and beyond. But it is not all smooth sailing—rising trade tensions, regulatory changes, and evolving reimbursement models could bring new challenges.
Stryker Corporation made bold moves in 2024, snapping up a number of companies and setting the stage for growth in 2025. With a $4.8 billion deal among a series of strategic acquisitions, and stock surging 34%, what’s next for this medical tech giant? CEO Kevin Lobo states “M&A will be the number one use of the company’s cash going forward.” In this article we look into some of the SYK acquisitions over 2024.
This article explores the strategic incorporation of carried interests in estate planning, particularly for newly formed private equity funds. It discusses the benefits and complexities of leveraging such interests under current economic conditions and tax regulations to optimize estate outcomes.
After a strong 2H24, community and regional bank stocks are down 5% in Q1 2025 and are down about 15% from late November when bank stocks peaked in a run that started mid-year. Valuations for individual stocks, a sector such as banking and the overall market will ebb and flow with a variety of factors, but ultimately earnings and earnings growth are the mother’s milk of investing. One asset manager years ago provided a useful framework to think about profitability, growth, and valuation as a framework for stock selection.
This article discusses important concepts of personal vs. enterprise goodwill in valuations for divorce. It is important to understand the business, industry, and efforts of the divorcing spouse(s) & non-divorcing parties to perform a thorough, supportable analysis. It is also important to know how each state treats personal goodwill – some states consider personal goodwill to be a separate asset, and some do not make a specific distinction for it and include it in the marital assets. Additionally, while there are several accepted methodologies for determining % allocations to personal vs. enterprise, there are not uniform standards nor guidelines that govern the how-to’s; as such these analyses are complex and require subject matter expertise.
Potential IRS layoffs and uncertain estate tax policies create a shifting landscape for estate planning. While enforcement may decline temporarily, tax laws evolve, and estate tax repeal remains uncertain. Prudent planning, including adherence to Adequate Disclosure Regulations, ensures long-term protection and stability. Staying proactive is key to navigating future changes.
The 2025 Acquire or Be Acquired (AOBA) Conference in Phoenix reflected a renewed sense of optimism for the banking industry. With small-cap banks rebounding in late 2024 and earnings growth on the horizon, the outlook for M&A is improving. Increased capital market activity, pent-up demand from buyers and sellers, and a shifting regulatory environment all signal a potential acceleration in bank deals this year.
Read our full breakdown of AOBA’s key themes and insights in this month’s BankWatch.
After the turbulence caused by rising interest rates and regional bank failures, 2024 marked a turning point for community and regional bank stocks. The S&P Small Cap Bank Index surged 23% in the second half of the year, buoyed by optimism around net interest margins and a friendlier regulatory environment. However, challenges remain for smaller banks in 2025, such as weak loan growth and higher-for-longer short-term interest rates that may limit NIM expansion. Meanwhile, larger banks look poised to benefit from rising capital markets activity. While the outlook for bank earnings in 2025 is positive, this should be viewed in the context of a richly valued stock market where index fund and ETF outflows pose a threat to bank stock performance. We look back on 2024 performance and consider factors that may influence bank stock performance in 2025.
So, how does a business owner evaluate their business? And how can advisers or formal business valuations assist owners examining their businesses? There are at least six ways and they are important, regardless of the size of the business. All six of these should be contemplated within a formal business valuation.
This issue of Value Added® explores the elements of a quality valuation that increase the prospects of a favorable resolution of an examined matter, or the desired accepted-as-filed outcome at an initial reporting stage.
M&A activity in the banking sector showed modest improvement in 2024, with transactions rising to 126 from a multi-decade low of 101 in 2023, though pricing remained subdued by historical standards. Institutional investors demonstrated renewed support, enabling equity raises and strengthening buyer capital, setting the stage for potentially stronger activity in 2025. Mercer Capital leverages its 40 years of expertise to guide boards through strategic transactions, offering insights into M&A pricing, equity considerations, and the investment merits of acquirer shares.
In this article we report on the price volatility of Evolent Health, Inc. (EVH) in recent quarters.
The last several years have been interesting in the venture capital space. Venture capital financing increased rapidly in 2020 and 2021 and has fallen sharply since the 2021 peak. Less free-flowing capital for start-ups and early-stage companies has led to … Continued
The 2024 elections delivered a Republican sweep of the Presidency and Congress, setting the stage for potential tax policy changes. The likely extension of tax provisions from the 2017 Tax Cuts and Jobs Act, which are currently set to expire on January 1, 2026 is central to the uncertainty. The potential ten-year maximum extension would include maintaining the elevated estate and gift tax lifetime exclusion amount of $10 million, indexed for inflation ($13.99 million in 2025). However, legislative realities may lead to a shorter extension than ten years or even modifications to the exemption altogether. In this article written shortly after the 2024 presidential election, we outline possible changes to tax policy and the need for continued estate planning.
The U.S. presidential election triggered a strong rally in bank stocks, with investors expecting banks to benefit from deregulation, greater economic growth, and M&A. While professional pollsters may have missed the mark, the election result was accurately predicted by Moo Deng, a baby pygmy hippo that has achieved celebrity status. Given her clairvoyance, who better to offer her outlook for the banking industry over the next four years?
Spirit Airlines filed for bankruptcy on November 18, 2024. We will see creditors take control of the company after a nearly two-year saga involving Frontier Airlines, JetBlue and the Department of Justice successfully suing to block the proposed merger with JetBlue. Hindsight is easy, but the Spirit board made a disastrous decision like Richard Fuld in attempting to strike a better deal when the market signaled otherwise.
As the holiday season is upon us, and with Thanksgiving around the corner, I would be remiss not to reflect and share highlights from a bustling fall season at Mercer Capital. We are very grateful and thankful for the experiences, opportunities, and interactions with many of you!
Purchase price allocation is a critical step in the transaction reporting process under ASC 805. Future amortization expense, changes in the fair value of earnout liabilities, and even goodwill impairment testing all depend on the outcome of the initial allocation. This article will provide an overview of the PPA process, discuss common intangible assets, and review some best practices and potential pitfalls.
As we enter a new downrate cycle post-pandemic, bank metrics like cost of funds (COF) and net interest margins (NIM) are in focus. In this month’s Bank Watch, we analyze changes in key metrics from the recent uprate cycle and provide historical insight into how these metrics moved in prior downrate cycles. Historical trends suggest that while margins may stabilize initially, downrate periods often compress NIM. Early 3Q24 data shows signs of stabilization, but the impact of further rate cuts remains uncertain.
In this article, we discuss the importance of fairness opinions when the primary form of consideration consists of the buyer’s shares.