M&A deal flow was sidelined for much of 2022 and 2023, but the economy’s soft landing, stabilizing interest rates, and pent-up M&A demand are expected to compel buyers and sellers to renew their efforts in 2024 and beyond. As deal activity recovers, sellers need to be prepared to present their value proposition in a compelling manner.
For many sellers, an independent Quality of Earnings (“QofE”) analysis and report are vital to advancing and defending their asset’s value in the marketplace. And it can be critical to the ensuing due diligence processes buyers apply to targets.
In this article, we review five reasons sellers benefit from a QofE report when responding to an acquisition offer or in preparing to take their businesses to market.
The ongoing battle between East Coast and West Coast ports is making waves in the logistics industry. Recent events like the El Niño weather event and attacks on vessels in the Red Sea have impacted marine logistics and transit times. The overall impact of these events remains to be seen, but it highlights the importance of keeping up with reshoring and nearshoring trends in the industry.
The 2024 Acquire or Be Acquired conference saw discussions on traditional bank M&A, managing balance sheets, growing deposits, and leveraging technology. There was cautious optimism for an uptick in deal activity in the second half of the year. In this article we recap a few themes from this year’s conference.
In prior posts, we have written about the benefits of hiring an expert in family law cases, whether it’s expected to settle or go to trial. In part 1 of this 3 part series, we provide you with a resource that will assist you and your clients during one of the most difficult times in their lives, divorce. We have compiled a list of financial documents that are typically needed in the divorce process and decoded common financial terms helpful to attorneys and their clients.
In 2024, as the prospect of Fed rate cuts begins to attract buyers back into the market after a period of caution in 2022 and 2023, the importance of thorough due diligence cannot be overstated.
Management should pay close attention to the crucial role that a Quality of Earnings (“QofE”) report can play in their acquisition decisions.
From uncovering sustainable earnings and identifying cost-saving potentials to understanding revenue synergies and assessing capital needs, a comprehensive QofE report emerges as an indispensable tool for business directors aiming to navigate the complexities of acquisitions with confidence and strategic insight.
The SEC’s Pay Versus Performance disclosure rules introduced significant new valuation requirements related to equity-based compensation paid to company executives. As the 2024 proxy season gets underway, what lessons have been learned and what guidance has the SEC provided to registrants? We discuss some of the SEC’s recent Compliance & Disclosure Interpretations and share some best practices as companies gear up for Year 2 of the new Pay Versus Performance framework.
Over the past decade stock-based compensation (SBC) gained widespread popularity as a way to reward employees while conserving cash. In this article, we discuss how market volatility can affect employee, management, and investor perspectives on Stock Based Compensation.
In the case of Connelly v. United States, a roofing and siding materials company, Crown C Supply Company, Inc., faces a complex legal and financial challenge following the death of one of its major shareholders. The dispute centers on whether life insurance proceeds should be included in the company’s equity value for buyout purposes, a decision with significant implications for the valuation of shares and the financial future of the company. This case, now headed to the Supreme Court, highlights the critical importance of clear buy/sell agreements and the role of life insurance in shareholder buyouts, offering essential insights for businesses navigating similar transitions.
One of BankWatch’s favorite artists is the Dutch painter Hieronymus Bosch (1450-1516). One triptych, The Garden of Earthly Delights, depicts a utopian scene in the middle panel adjacent to a hellscape in the right panel. It serves as an apt metaphor for the banking industry’s stomach churning volatility in 2023.
Preliminary results for 2023 show that the number of goodwill impairments is increasing for both large and middle-market public companies. Based on data through November, the number of impairments recorded by firms on the S&P 500 and Russell 2000 indices had already eclipsed 2021 and 2022 full-year figures. Interestingly, these trends materialized even as the indices themselves posted favorable total returns for the year of 25% and 14%, respectively. Public and private companies currently in the process of performing their annual/interim impairment tests should be on the alert if their peer group turns out to be the one recording impairment charges.
An RIA’s margin is a simple, easily observable figure that condenses a range of underlying considerations about a firm that are more difficult to measure. As much as a single metric can, margins reflect the health of a firm—indicating whether a firm has the right people in the right roles, whether it’s charging enough for services, whether it has enough (but not too much) overhead, and much more. But when assessing your firm’s margins, it’s important to consider the context of the firm’s ownership and compensation structure and also the tradeoffs associated with margins that are too high or too low.
Another tough call for the merger arb community – acquirer and target sue each other in Delaware Court of Chancery to respectively terminate the merger agreement or force consummation of the merger.
Bank and thrift M&A activity was subdued in 2023, with deal values reaching multi-decade lows. The challenging M&A environment was exemplified by the failed merger between Toronto-Dominion Bank and First Horizon in May, and continuation of the bear market that developed in 2022 for bank stocks and fixed income securities. Despite the overall slump, or perhaps because of it, M&A activity eventually will rebound, potentially explosively if the Fed follows through with rate cuts and the economy avoids a meaningful recession.
In the third and fourth quarters of 2023, securities portfolio restructuring is a strategy that appears to be gaining momentum as more banks are opting to realize losses on underwater securities. In this month’s Bank Watch, we look at some of the recently announced transactions and discuss potential advantages and disadvantages of balance sheet repositioning.
The third quarter of 2023 has certainly been one for the books for the Transportation & Logistics industry. The shipping frenzy brought on by the COVID-19 pandemic has run its course and the industry is returning to more normal levels. At the same time, it is important to note that a decline from never-before-seen highs does not necessarily indicate a freight recession is underway. Many of the year-over-year data points will indicate large declines, but on a quarterly or monthly basis, the data is much more stable.
Earlier this year we reviewed the fairness opinions issued by Morgan Stanley and Barclays for the still pending JetBlue-Spirit merger. In an updated look at the deal, the adage that time is the enemy of all deals comes to mind while pondering Frew’s question from the earlier post of whether JetBlue could close.
In this article we provide a summary of recent specialty finance transactions by bank acquirors. The article dives into the benefits, risks, and key considerations that bank buyers should examine when evaluating a specialty finance acquisition.
Wholesalers seeking a strategic exit may be facing tighter market valuations. But the downside in previously robust transaction trends may represent a silver lining for wholesalers needing to achieve overdue ownership succession and favorable estate planning objectives. In this article we discuss how to take advantage of current market conditions to enhance the outcome of your ownership succession and estate planning strategies.
This is the second of a two-part series where we focus on navigating business valuation complexities in litigation. In this article we discuss multiple valuation dates and opposing expert reports.
During the third quarter of 2023, market expectations solidified that interest rates would remain elevated for some time, contrary to forecasts earlier in 2023 that the Federal Reserve would begin cutting its target Fed Funds rate later in 2023. In this article, we evaluate the effect of a higher-for-longer rate environment on net interest margins, growth strategies, securities portfolio management, credit quality, and M&A.
Valuing a business in a litigation context is akin to navigating a complex maze. This intricacy is amplified when dealing with multi-entity structures, multi-location businesses, multiple valuation dates, and opposing expert reports. In such cases, crafting a well-thought-out strategy is essential to ensure a fair and equitable assessment of the business’s value. This article is the first of a 2-part series that provides strategies on how to proceed in these challenging litigation scenarios. In Part 1, we cover how to handle the complexities involved in valuation a business with multi-entity structures and multiple locations.
Int his article we analyze the trend of higher core deposit intangible (CDI) asset valuations spurred by rising interest rates. We also explore mitigating factors to higher CDI values including an increase in average cost of funds, industry deposit attrition, and shifting deposit mix.
In this article we explore the necessity for detailed forensic investigation to uncover any concealed financial strategies or irregularities that may be deployed in anticipation of a divorce. The stakes are high, and the methods can be intricate, hence the essential role played by financial experts in ensuring accuracy and fairness in the equitable distribution of marital assets.
Determining the value and classification of financial assets can be challenging during a divorce proceeding. The value of a couple’s closely held business could be the most valuable asset in the marital estate. If the business was owned prior to marriage, the identification and quantification of any appreciation as active or passive could be critical to the overall marital value placed on that asset.
