The acquisition of U.S. Concrete by Vulcan Materials highlights key valuation nuances in the construction industry. Evercore and BNP Paribas provided fairness opinions, using various methods like Guideline Public Company and Transaction analyses, which led to differing equity value estimates. Despite these differences, both banks agreed the $74 per share offer was fair, making this deal a notable case in M&A valuation.
Chris Mercer reviewed the Supreme Court’s Connelly v. United States decision, which ruled that life insurance received by a company after a shareholder’s death increases the company’s value for tax purposes. This ruling has important implications for divorce valuations, where accurately assessing business assets, including life insurance proceeds, is crucial.
Since our last update in 2023, banking deal activity has remained sluggish but may be recovering. Core deposit intangible (CDI) values have slightly increased, averaging 2.74% through mid-September 2024, up from 2.58% in 2023. Interest rates continue to drive CDI values, and recent Federal Reserve rate changes are anticipated to influence CDI values. Although market rates are trending downward, CDI values remain resilient. Future rate cuts could further affect these values, making a detailed understanding of core deposit characteristics essential for accurate valuation.
For business owners navigating a divorce, the value of a family business and its associated real estate can significantly impact the division of marital assets. Real estate strategies vary widely—from owning operating real estate to leasing from third or related parties—and each approach offers different implications for risk, capital appreciation, and business flexibility. Understanding these strategies can help couples make informed decisions about their marital estate during a divorce.
The liquidity crisis of 2023 has given way to periodic capital raises by regional (and community) banks that are grappling with the aftermath of the Fed’s ultra-low-rate policies. KEYCORP was the latest recipient of a sizable equity investment, but KEYCORP may point to a pick-up in M&A activity.
The banking sector saw a significant rally in stock prices in July 2024 as net interest margins stabilized and improved after a period of compression. M&A activity is also showing signs of recovery, with higher deal volumes and valuation multiples, leading to a cautiously optimistic outlook for the remainder of the year despite potential concerns over asset quality.
This month we discuss the growth of commercial real estate loans despite interest rate pressure, the decrease in commercial property prices, and the increasing number of delinquent loans. The U.S. Federal Reserve conducted stress tests on large banks to assess their resilience in severe economic scenarios, emphasizing the importance of understanding the diverse nature of CRE loans and the varying degrees of risk associated with different types of commercial properties.
The estate planning world is keenly focused on the SCOTUS decision in Connelly. Does the decision render entity-purchased life insurance useless, or at least, less useful than before? At the very least, in light of this ruling, every buy-sell agreement funded by life insurance should be reviewed by competent legal and tax counsel to ensure that the agreements operate as planned when triggered. For more information about the ruling, read Chris Mercer’s informative article.
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.
A quality of earnings (“QoE”) report and an audit are both essential tools in the business world, but they serve distinct purposes and offer varying insights. Audits are broader and regulatory in nature, whereas QoE analyses are more focused and strategic, catering to the needs of investors and decision-makers who require a deeper understanding of a company’s true financial health and future potential.
We were proud to sponsor and attend the AAML’s inaugural National Family Law Conference in Nashville, Tennessee on May 16-18, 2024. As usual, the sessions and attendees did not disappoint. Our biggest takeaway was that successful cases include the right recipe: the right attorney and the right expert – essentially, the right team. In this article we discuss some of our takeaways from this years AAML Family Law Conference.
Rising regulatory burdens contributed to the stunning growth in private equity the last two decades and private credit in recent years. PE investors ultimately require liquidity, however. Subdued M&A and IPO markets since mid-2022 have spurred growth for private equity secondaries, which mostly consists of GP-initiated transactions for continuation funds and LP-initiated transactions for portfolio interests.
In March 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-01, which clarifies the accounting treatment of profits interest awards. This move aims to enhance the consistency and understanding of Generally Accepted Accounting Principles (GAAP) related to such awards. The ASU update helps entities ascertain whether certain awards need to be measured at fair value under ASC 718 or if they should be accounted for under other guidance. In this article, we summarize the new FASB guidance and discuss common methods for valuing profits interests under ASC 718.
Banks have been divesting their insurance subsidiaries at favorable valuations over the past decade, driven by factors such as higher capital requirements, lower returns compared to public insurance brokers, and increased private equity interest in insurance agencies. This has allowed banks to redeploy capital, improve capital ratios, and focus on their core banking business.
Previously in this series, we discussed the importance of hiring an expert and the documents needed to prepare the marital balance sheet, analyze support and need in a Lifestyle Analysis (aka Pay & Need Analysis), and perform a business valuation. This month, we conclude our series with the documents needed for other forensics services and valuation services. In this post, we discuss documents for arithmetic determinations of separate vs. marital, active vs. passive, and asset tracing. The appraiser/financial expert does not render legal opinions, though, assists with quantifying complex financial issues, while being aware of statutory and case law in varying jurisdictions.
The FTC has updated its rulings concerning the enforceability of noncompete agreements while also making significant allowances for agreements arising from transactions. The elimination of noncompete agreements will shift some value from identifiable, amortizable assets to goodwill and may influence the attrition rates used to calculate the value of customer-related assets. The new ruling is expected to be met with substantial litigation before it becomes effective.
With rising inflation and interest rates, bank investors are facing challenges as stocks are underperforming in the market. As a result, it may be an opportune time for bank investors to consider estate planning opportunities to transfer business value to future generations. The sunsetting of favorable estate tax provisions in 2025 makes it even more important to consider estate planning strategies now.
The cost of corporate M&A failures is high for both buyers and sellers. These high stakes mean that thorough and high-quality due diligence is critical. A Quality of Earnings (or QofE) analysis is an essential component of transaction diligence for both buyers and sellers. Optimizing your transaction diligence requires assembling the right team. In this article, we discuss four things buyers and sellers should look for when evaluating potential QofE providers.
In Parts 1 and 2 of this series, we discussed the importance of hiring an expert and the documents needed to prepare the marital balance sheet and analyzing support and need in a Lifestyle Analysis.
This month, we discuss the documents needed for performing a business valuation, the core competency of Mercer Capital.
There are many unique considerations and complexities to business valuation in divorce, often requiring more documentation and analyses. This includes personal goodwill, owner/operator compensation for valuation and income division purposes, formula clauses in Buy-Sell Agreements, and active vs passive, among others.
This article outlines five structural factors and trends that influence demand and supply of medical devices and related procedures in 2024.
An investor group, led by former Secretary of the treasury Steve Mnuchin, invested $1.05 billion in New York Community Bank following a surprise Q4 loss. The investment was necessary to boost capital and shore up confidence. Learn more about the transaction and our thoughts on it through the links provided.
The proposed merger between Capital One and Discover could shake up the global payments industry. If approved, it would make Capital One the largest credit card company based on loan volume and third largest based on purchase volume. The deal could also lead to better rewards programs and physical presence for customers, but regulatory hurdles remain.
The recent collapse of the Francis Scott Key Bridge, a crucial link for the Port of Baltimore, is the most recent upheaval in the logistics industry amidst a series of global disruptions. This incident not only underscores the vulnerability of supply chains to unforeseen events but also signals potential short-term delays and long-term shifts in cargo distribution across East Coast ports. As the transportation and logistics industry navigates these challenges, including labor disputes and global events affecting cargo routes, the implications of this collapse extend beyond immediate disruptions and will shape the future landscape of international trade and transportation.
In Part 1 of this series, we discussed the importance of hiring an expert and the documents needed to prepare the marital balance sheet including tax returns and a personal financial statement. In Part 2 we discuss the documents needed for analyzing support and need, otherwise known as a Lifestyle Analysis or a Pay and Need Analysis.