Buy-Side Solvency Opinions

Not only is a solvency opinion a prudent tool for board members and other stakeholders, but the framework of solvency analysis is ready made to score strategic alternatives and facilitate capital deployment.

Strategic Benefits of Stress Testing in an Uncertain Economic Environment

With both inflationary pressures and interest rate risk causing volatility in the current and forecasted economic environment, both banks and credit unions may find themselves contending with uncertainty surrounding their capital positions. Stress testing can be an important tool to utilize in order to better understand how your bank or credit union is positioned to withstand a severely adverse economic scenario. In this article, we give an overview of the stress testing process, as well as what strategic benefits it may provide to your financial institution.

Buy-Side Fairness Opinions: Fair Today, Foul Tomorrow?

Directors are periodically asked to make tough decisions about the strategic direction of a company. Major acquisitions are usually one of the toughest calls boards are required to make. Buy-side fairness opinions have a unique place in corporate affairs because the corporate acquirer has to live with the transaction. What seems fair today but is deemed foul tomorrow, may create a liability for directors and executive officers. This can be especially true if the economy and/or industry conditions deteriorate after consummation of a transaction.

Tesla Walks the Entirely Fair Line with SolarCity

In March of 2016 Elon Musk was laying the ground work for the merger of Telsa, Inc. and SolarCity Corporation. This presentation looks at the issues raised by plaintiffs who alleged Musk orchestrated the deal to bail-out SolarCity, and how the Delaware Court of Chancery ruled on the issues on April 27, 2022 under the entire fairness standard rather than deferential business judgment rule.

Valuing Stock Options of Start-up Companies: A Complex Issue in Marital Dissolutions

The valuation of stock options is a complex issue that divorcing parties may face during the determination and division of the marital estate. Designed as compensation to both reward past performance and retain employees in the future, these benefits can be difficult to value, particularly at a specific point in time for the purpose of marital dissolution. In this article, we walk through an example of how to value a not so simple stock option situation – one in a start-up company.

Bond Pain and Perspective on Bank Valuations

For fixed income investors who were around, 1994 is known as the Great Bond Massacre when rates rose globally, including by about 300bps in the US. The bear market caused mayhem in part because of increased leverage used to finance the “carry trade.” Among the casualties were Orange County, California and Mexico. Banks managed through that bear market with some scrapes but no major casualties. So far the same can be said about banks and the fixed income bear market of 2022 even though the magnitude of price reductions is greater than 1994.

Considering Contingent Consideration

Contingent consideration is a common feature of M&A when both parties are private, or the acquirer is public, and the target is private. There are many forms of contingent consideration in M&A. These include post closing purchase price adjustments that can alter total transaction value or that can alter the payment and realization of net proceeds through the recovery of transaction set-asides such as escrow balances or the payment of holdbacks and deferrals.

Meet the Team – David W. R. Harkins, CFA, ABV

In each “Meet the Team” segment, we highlight a different professional on our Family Law team. In this segment, we highlight David Harkins. David works in our Nashville office and is a member of the firm’s Litigation Services Support team.

Negotiating Working Capital Targets in a Transaction

This is the sixth article in a series on buy-side considerations. Our focus in this article is on understanding how and why net working capital targets are crucial for buyers looking to negotiate deals that look good at closing and pass the test as the buyer takes over the operation of the newly acquired business.

Buy-Side Considerations

In this series of articles, we cover buy-side topics from the perspective of middle-market companies looking to enter the acquisition market. Read the articles in this series.

The Importance of a Quality of Earnings Study

This is the fifth article in a series on buy-side considerations. In this series, we will cover buy-side topics from the perspective of middle-market companies looking to enter the acquisition market. Our focus in this article is on how the quality of earnings (QoE) analysis can help acquirers better analyze possible acquisition targets.

Strategic Premiums: Can 2+2 Equal 5?

Many acquirers buy businesses at a value higher than this intrinsic value, paying what is referred to as a strategic premium. In this post we discuss the theory behind strategic premiums, and how they can be advantageous or detrimental to acquirers.

Considerations in Merger Transactions

When considering a buy-side transaction to expand, many middle market companies may not consider a merger transaction as an option compared to an outright acquisition. Mergers are often seen as transactions for big conglomerate-type companies on Wall Street, but they can be effective for middle-market businesses as well. In this article we discuss the key questions that must be addressed when considering a merger transaction, including, corporate governance, social issues and economic questions.

First Quarter 2022 Review: Volatility Resurfaces

In this month’s article we summarize key metrics we track regarding equities, fixed income, and commodity markets leading up to the Ukrainian invasion on February 23, 2022 and thereafter.

How to Approach a Target and Perform Initial Due Diligence

This is the second article in a series on buy-side considerations. In this series, we will cover buy-side topics from the perspective of middle-market companies looking to enter the acquisition market. Our focus in this article is to summarize some practical considerations for approaching and vetting an identified target.

Understand the Asset Approach in a Business Valuation

In previous posts, we wrote about the income and market approaches used in business valuations. This article presents a broad overview of the third approach, the asset approach. While each approach should be considered, the approach(es) ultimately relied upon will depend on the unique facts and circumstances of each situation.

Identifying Acquisition Targets and Assessing Strategic Fit

With aggregate M&A activity setting records in 2021 and continuing a strong pace in 2022, many businesses are exhibiting a thirst for growth or conversely their shareholders are eyeing an exit at favorable valuations. This article provides touch points and practicalities for identifying viable merger and acquisition targets and assessing strategic fit.

Meet the Team – Z. Christopher Mercer, FASA, CFA, ABAR

In each “Meet the Team” segment, we highlight a different professional on our Family Law team. This segment we highlight Chris Mercer. Chris is the Chariman here at Mercer and is active in family law litigation and corporate valuation.

Bank M&A 2022 | Gaining Altitude

At this time last year, bank M&A could be described as “on the runway” as economic activity accelerated following the short, but deep recession in the spring. Next year, activity should gain altitude. Should and will are two different verbs, however.

Insurance Valuation Services for Financial Sponsors

Mercer Capital has worked with financial sponsors in the insurance industry for years and we understand both the dynamics of the industry as well as the accounting and valuation issues that are likely to be encountered. In this article, we list the key areas in which Mercer Capital can help with investment and transaction activity in the insurance sector.