Karolina Calhoun Earns CFF Designation

Karolina Calhoun, CPA, ABV, senior financial analyst at Mercer Capital, has earned the Certified in Financial Forensics (CFF) credential from the American Institute of Certified Public Accountants.

Active Management Down But Not Out

Fresh off a 111-82 KO from the San Antonio Spurs on Saturday, our hometown Memphis Grizzlies are certainly battered but not totally eliminated from this year’s NBA title race. As this post goes to press, we still don’t know the outcome of Game 2, but it will undoubtedly be an uphill climb for the Grizz as it usually is against their divisional foes in Central Texas. Still, the Spurs/Grizz rivalry over the last ten years has not been nearly as one-sided as the battle for fund flows between active and passive investors in the ETF era.

People Are Worried About Equity Compensation

On the one hand, it is not difficult to imagine that tax changes would have some effect, at the margin, on the mix of the various forms of employee compensation – current cash, deferred/contingent cash, or equity scrips. On the other hand, it is difficult to conjecture a causal relationship between changing financial reporting requirements and lower aggregate (risk-adjusted) take-home worker compensation.

Revenue Recognition: What’s an Analyst to Do?

The new revenue recognition standard has been called “historic in its breadth and impact across industries.” The standard itself was introduced back in 2014 with the FASB’s issuance of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). Since that time, accountants and preparers have grappled with preparing for the new guidance. The focus of this post is not to comprehensively explain the new rules. Instead, we examine one public company’s experience with the transition (Workday) and then highlight a few areas that may be of interest to analysts, finance managers, and interested onlookers – from a valuation perspective.

Reading the Tea Leaves at Ruth’s Chris Steak House in Lafayette

l was struck by how the Ruth’s Chris Steak House in Lafayette, La. was packed on a mid-March Tuesday night. When I ate there a year ago, I was one of a half-dozen people in the restaurant. Perhaps it is just a coincidence, but the price of oil nearly doubled over that period. The regional economy may not be that responsive to moves in the price of crude, but people’s reaction of being tight-fisted vs. loosening-up can change quickly based upon perceptions.

Mercer Capital Supports New Valuation Credential

Mercer Capital supports the new credential for valuation professionals whose practices are dedicated to valuing businesses and intangible assets for U.S. public companies. The CEIV™—Certified in Entity and Intangible Valuations™—is now available to current or prospective members of the American Society of Appraisers (ASA), the American Institute of CPAs (AICPA), or the Royal Institute of Chartered Surveyors (RICS).

Is Cash Always King?

When it comes to money, “enough” is the hardest word to define. The challenge of defining “enough” extends to corporate managers deciding what cash balance is appropriate. Cash balances can provide a cushion against unanticipated adverse events in the business. When companies need cash is usually the worst time to try to raise capital. Having sufficient cash on hand to weather an unexpected downturn in the business can help shareholders avoid dilutive capital raises at inopportune times. On the other hand, cash is a very low-yielding asset.

Charles Ellis on Indexing

A few months ago Amazon put Charles Ellis’ new book, Index Revolution, on my recommended list. I probably would not have bought it had I not heard Ellis give an extended interview on Bloomberg Radio one morning while walking the dogs. He is quite persuasive about the rationale for index funds. Although I own index funds, it is not a subject I had given much thought.

Distribution Policy in 30 Minutes

Of the three primary corporate finance decisions, distribution policy is the most transparent to shareholders. The purpose of this whitepaper is to help directors formulate and communicate a distribution policy that contributes to shareholder wealth and satisfaction.

Cashing In by Checking Out

The motivation behind incentive pay at the startup level is that in order for the employees to strike it rich, the company must succeed by hitting certain milestones. This aligns employees’ personal goals with the company’s overall success. The slight misalignment of this structure, however, can lead to employee turnover at companies.

A Market Participant Perspective on the Size Premium

The traditional method for measuring return premiums is backward-looking. Analysts typically compare realized returns for various asset classes over long historical periods, inferring the premiums from the differences in the return series. With regard to the size premium in particular, this approach has a number of shortcomings.

Blowback from Going Nuclear: Massive Goodwill Impairment Looms at Toshiba

On December 27, 2016 Toshiba Corporation, the Japanese electronics conglomerate, announced the possibility of a goodwill impairment charge related to its U.S. nuclear power plant construction business, specifically, CB&I Stone & Webster Inc. (“Stone & Webster”), which was acquired for $229 million in late 2015 by Toshiba’s Westinghouse Electric Company subsidiary. Both the buyer and target have been plagued by financial difficulties (and goodwill impairment charges) since that time.

Capital Structure in 30 Minutes

Capital structure decisions have long-term consequences for shareholders. The purpose of this whitepaper is to equip directors and shareholders to contribute to capital structure decisions that promote the financial health and sustainability of the company.

Mercer Capital Supports New Valuation Credential

Mercer Capital supports the new credential for valuation professionals whose practices are dedicated to valuing businesses and intangible assets for U.S. public companies. The CEIV™—Certified in Entity and Intangible Valuations™—is now available to current or prospective members of the ASA, the AICPA, or the Royal Institute of Chartered Surveyors (RICS).

Asset Manager Valuations Mixed at the Start of 2017

A quick glance at year-end pricing of publicly traded asset managers reveals a continued skid in cap factors for mutual fund providers offset by some multiple expansion for traditional and alternative asset managers.