Chapter 11 reorganization, which allows financially distressed companies the opportunity to restructure liabilities and emerge as a viable going concern, can be a chaotic and challenging time for the company. For management teams working through a bankruptcy, there are a number of valuation-related considerations. Here are five key concepts for management teams and their advisors to be familiar with when embarking upon a Chapter 11 reorganization.
Companies are allocating more money to developing nonphysical assets such as databases and brands than to building physical assets, such as new factories. With the rise of technology and professional service firms, which generate ideas and provide knowledge-based services, rather than physical assets, the U.S. marketplace is shifting from one which supplies goods to one which supplies ideas. The U.S. generates a large share of wealth from intangible assets such as patents, copyrights, and business processes. This store of value is essentially invisible to investors because internally generated intangible assets are not reported on the balance sheet. There is a growing gap in the balance sheet reflecting this shift from physical assets to intangible ideas and the Financial Accounting Standards Board (FASB) is considering adding the topic to its rule making agenda.
Over the last several years, various officials at the SEC have expressed concern about the broadening application of fair value measurement and its impact on the reliability and consistency of valuations performed for U.S. public companies. How is the valuation community responding?
In this post, we publish the slides “Dual Fairness Opinions and the Role of the Valuation Firm,” delivered by Jeff Davis at the IV OIV International Business Valuation Conference in Milan, Italy.
Non-compete agreements are increasingly in the news, though not always in the most favorable of contexts. Proponents argue that such agreements protect firms’ intellectual property and prevent the loss of key employees, customers, suppliers, and trade secrets. Others would suggest that non-competes stifle innovation by limiting competition and employee mobility. In this post, we consider recent examples of non-compete agreements and how they impact value.
