In March 2010, Diamond Foods, Inc. completed its acquisition of Kettle Foods. Nearly 40%, of the purchase price was allocated to “brand intangibles.” Such a high value leads to the question: How are such valuations determined and what are the drivers?
The AICPA released a draft accounting and valuation guide (via AICPA) for Assets Acquired to Be Used in Research and Development Activities in November of 2011.
On August 10, 2011, the FASB approved a pending exposure draft, “Testing Goodwill for Impairment,” which adds an optional qualitative assessment (referred to by some as the “Step Zero” test) to the annual goodwill impairment testing process.
Companies often use contingent consideration when structuring M&A transactions to bridge differing perceptions of value between a buyer and seller, to share risk related to uncertainty of future events, to create an incentive for sellers who will remain active in the business post-acquisition, and other reasons.
In December 2010, the FASB issued ASU 2010-28, which updated rules pertaining to the appropriate measure of reporting unit carrying value.
The Public Company Accounting Oversight Board (PCAOB) recently released the “Report on Observations of PCAOB Inspectors Related to Audit Risk Areas Affected by the Economic Crisis,” which identified instances where auditors failed to comply with PCAOB standards.
When it comes to portfolio company fair value measurement and reporting, 2011 lacked the drama of 2008 and 2009. Nonetheless, private equity fund managers – and their limited partners – cannot take fair value measurement for granted.
The FASB issued an exposure draft regarding a broad range of proposed amendments to Topic 820 on June 29, 2010. The exposure draft is part of the ongoing convergence project and is intended to more closely align fair value measurements under U.S. GAAP and IFRS.
Excerpted from Mercer Capital’s book, Valuation for Impairment Testing, Second Edition
For privately held companies (particularly those sponsored by private equity and venture capital funds), getting the valuation process right the first time for equity compensation grant compliance is always the least expensive route in terms of both direct and indirect cost.
With many acquirers spending 2009 on the sidelines, the new accounting treatment for contingent consideration arrangements under SFAS 141R remains largely untested.
A purchase price allocation report should be well documented, concise, and provide sufficient background information. This article enumerates elements of a properly prepared purchase price allocation report.
Based on our review of the case and Dr. Kursh’s report, it appears that Dr. Kursh used information that was factually based and within the range of reasonable comparisons with market data in his application of the QMDM. It is unfortunate, but the Court was apparently not convinced of the reasonableness of Dr. Kursh’s assumptions and their consistency with “hard data” that was in his report and otherwise readily available.
This article comments on the embedded capital gains tax liability issue as discussed in the case, Davis v. Commissioner.
The Welch case reinforces a point we have made many times, that business appraisers need to be exceedingly careful in citing Tax Court decisions as support for positions taken in tax-related valuations.
A 1997 case illustrates the complexities that can evolve in the valuation of debt securities and the weight the Tax Court applies to an appraiser’s effort to obtain and verify information on a particular interest to be valued.
There has been a substantial controversy regarding the appropriate treatment of embedded capital gains in determining the fair market value of interests of C corporations since the repeal of the so-called General Utilities doctrine by the Tax Reform Act of 1986 (“TRA”).
We are living in an uncertain world. Business owners must carefully consider the current uncertainties in order to position their companies (and themselves) optimally for the future.
On October 11, 2007 the SEC approved FINRA’s new Rule 2290 regarding the preparation of fairness opinions and the disclosures required in fairness opinions.
It is common for business owners to get serious about exit strategies only after a potential buyer comes knocking on the door.
An initial private offering (IPO) is an offering of private company stock to the investing public through the regulated, public securities markets. For rmany reasons, the IPO route to shareholder liquidity or growth capital is unavailable to most private companies.
It is important for business owners to understand the factors that influence value in both the general economy and the acquisition market. This is certainly necessary for owners who are currently considering the sale of their business or may consider such a transaction in the near future.
As part of our transaction advisory and consulting services, Mercer Capital is often called upon to provide fairness opinions in transactions.
While this article highlights our experience in the banking industry, the strategies presented here are applicable for anyone in any industry engaging in a transaction.