Jeff K. Davis, CFA, Managing Director of Mercer Capital’s Financial Institutions Group, was recently quoted by American Banker on Canadian Imperial Bank of Commerce’s continued challenges after their turbulent acquisition of PrivateBancorp.
Jeff K. Davis, CFA, Managing Director of Mercer Capital’s Financial Institutions Group, was recently quoted by American Banker on Canadian Imperial Bank of Commerce’s continued challenges after their turbulent acquisition of PrivateBancorp.
All classes of asset managers are off to a decent start in 2017 after a strong end to 2016 as the market weighs the impact of fee compression against rising equity prices.
In our most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, we provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments.
This week, we take a break in our musings on asset manager valuations and impractical sports cars to share some recent media on trends in the RIA space we’ve been following.
Normally, we would expect strong financial markets to validate most RIA models and at least hide the weaknesses of others. In this case, though, a rising tide isn’t lifting all the boats. Why? In this post, we pinpoint the reasons why and discuss a way forward.
From our perspective, contractual (and/or customary) rights and preferences allocated among the various parties to a transaction define the parameters within which we operate while measuring fair value. That being said, the extent to which differential shareholder rights can or cannot be (legally or normatively) enforced may inform the assumptions and expectations of market participants, be they VC investors or startup employees. And those market participant perspectives will inform the valuation analysts’ assumptions and methods.
Jay D. Wilson, Jr., CFA, ASA, CBA, vice president of Mercer Capital, was quoted in a recent DealMarket piece on the growth of B2B FinTech investing.
Much has been written about Amazon’s $13.4 billion acquisition of Whole Foods Market that was announced on Friday, June 16. There are all sorts of theories about Amazon’s strategy and the brilliance (or folly) of combining the powerhouse online retailer with a traditional retail grocery chain. But for purposes of this post, we’re going to take a step back and look at the impact of the two externally-driven events on the stock prices of other players in the industry.
Jay D. Wilson, Jr., CFA, ASA, CBA, vice president of Mercer Capital, will be hosting a complimentary webinar, Creating Strategic Value Through FinTech, for community bankers on July 11, 2017.
Overriding royalty interests are often used as an incentive for those who are affiliated with the drilling process but do not own the minerals or E&P company (a broker or geologist for, example). Owners of ORRI, like royalty interest owners, bear no cost of production but own a portion of the revenues generated by the drilling process.
What effect does the loss of a key leader have on the value of an enterprise? Valuation specialists often consider whether a business is subject to a key-person dependency when measuring fair value. For early-stage enterprises, key-person dependencies tend to be obvious and significant as many start-ups simply would not survive the loss of the founder. For a company of the scale and complexity of Uber, the analysis becomes a matter of degree. To what extent would the loss of Mr. Kalanick’s services affect the expected cash flows (including growth) and risk perceived by investors?
The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb. Nevertheless, IPOs remain scarce compared to prior years.
The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb. Nevertheless, IPOs remain scarce compared to prior years.
Jay D. Wilson, Jr., CFA, ASA, CBA, vice president of Mercer Capital, was recently quoted in a Forbes article on the rise in business-to-business payments in the FinTech space.
Travis W. Harms, CFA, CPA/ABV, senior vice president of Mercer Capital, spoke recently with Compliance Week on The Appraisal Foundation’s exposure draft on how to value contingent consideration as part of business transactions.
In October 2015, the SEC adopted final rules governing the crowdfunding of startups and Regulation Crowdfunding was issued in May 2016. Subsequently, the SEC has issued investor bulletin(s) to educate potential investors on the new investing opportunities. The new rules allow non-accredited investors to invest directly in startup (and other) companies that can raise up to $1 million every twelve months through crowdfunding. At the time the SEC first proposed the rules in October 2013, we speculated that crowdfunding might turn into a new source of capital for small businesses. Now, a year after Regulation Crowdfunding came into effect, we take a look at the state of crowdfunding.
Contingent considerations (earnouts) are agreements between the parties to a corporate transaction to defer a portion of the purchase price. Techniques for measuring fair value have evolved over time. The exposure draft advocates wider application of options-based methods. The guidance is an important step in advancing the valuation profession. The SEC and others have lamented the diversity of practice among practitioners, and the exposure draft addresses that concern in a constructive manner. The detailed discussions and examples should promote broad and consistent adoption of techniques that have to-date been applied only sporadically and inconsistently. Techniques advocated in the exposure draft should promote the “auditability” of very tricky and subjective fair value measurements.
The rules are changing for how companies report their investments in other businesses. As highlighted in a recent article in the New York Times, new rules from the FASB regarding how entities will have to measure certain equity investments (for example, Google’s equity holdings in Uber) may lead to increased earnings volatility and additional fair value complexities. Here are five things to know about the “new” rules and a few questions to consider as the implementation dates approach.
It seems like it was just last year when we mused if non-GAAP earnings measurements were becoming a permanent fixture of the market. How quickly the times change.
Jay D. Wilson, Jr., CFA, ASA, CBA, vice president of Mercer Capital, was quoted on current acquisition trends among FinTech startups in a recent piece by Tearsheet, a leading digital finance publication.
A couple of articles in the Wall Street Journal last week highlighted challenges of managing and investing in early-stage companies. From a valuation standpoint, the articles are timely reminders of the importance of cash burn rates, dilution factors, and exit probabilities in measuring the fair value of startups.
Brooks K. Hamner, CFA, vice president of Mercer Capital, will present at the Financial Consulting Group’s FCG University 2017 in Atlanta, Georgia.
Jay D. Wilson, Jr., CFA, ASA, CBA, vice president of Mercer Capital, will be attending the FinXTech Annual Summit in New York City on April 26, 2017.
With the rapid rise of corporate venture capital and increasing pressure to jump on board with startups, it seems that many companies across the industry spectrum are making venture investments.