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Articles

We have compiled a library of articles written by the professionals of Mercer Capital. This library contains our most recent articles, as well as older pieces for your information.

Bankruptcy & Restructuring

These articles feature relevant and useful advice on a range of strategic matters related to the bankruptcy and restructuring process.

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Latest Article

Fresh Start Accounting Valuation Considerations: Measuring the Reorganization Value of Identifiable Intangible Assets

The valuation techniques for identifiable intangible assets are rooted in the fundamental elements of business valuation, cash flow and risk, under the cost, market, and income approaches. However, when valuing identifiable intangible assets, we use valuation methods adapted to the unique attributes of those assets.

Buy-Sell Agreements

Mercer Capital is the leading provider of buy-sell agreement valuation services in the nation. Business owners, attorneys, and other business advisors who are either subject to a buy-sell or shareholder agreement or draft these agreements will find the content here helpful.
 

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Observations from a Buy-Sell Agreement Gone Bad

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.

Case Review

Reviews of Tax Court and other court cases addressing valuation issues of importance to shareholders and professional advisors to business are contained here.

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Latest Article

Supreme Court Upholds Connelly

The estate planning world is keenly focused on the SCOTUS decision in Connelly. Does the decision render entity-purchased life insurance useless, or at least, less useful than before? At the very least, in light of this ruling, every buy-sell agreement funded by life insurance should be reviewed by competent legal and tax counsel to ensure that the agreements operate as planned when triggered. For more information about the ruling, read Chris Mercer's informative article.

Corporate Valuation

Corporate valuation articles cover a broad range of topics of interest to business owners and their professional advisors.

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Latest Article

Valuation Considerations in Bankruptcy Proceedings

The outbreak of COVID-19 in the United States has caused a severe public health crisis and an unprecedented level of economic disruption. We discuss the key valuation-related steps of a Chapter 11 restructuring.

ESOPs

Mercer Capital understands ESOPs because we are an ESOP-owned firm. Articles included are written for Trustees and other professional advisors to ESOP companies and address a broad range of ESOP valuation issues.

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Latest Article

Analyzing Financial Projections as Part of the ESOP Fiduciary Process | Appraisal Review Practice Aid for ESOP Trustees

In recent years there has been increasing concern among ESOP sponsors and professional advisors (trustees, TPAs, business appraisers, legal counsel) regarding the scrutiny of the DOL, the Employee Benefits Security Administration (“EBSA”), and the Internal Revenue Service (“IRS”). These entities (and agencies thereof) are tasked with ensuring that ESOPs comply with the Employee Retirement Income Security Act (“ERISA”) as well as with various provisions of the federal income tax code concerning qualified retirement plans (including ESOPs). Citing concerns for poor quality and inconsistency in business appraisals, the DOL has sought in recent years to expand the meaning of “fiduciary” under ERISA to include business appraisers. In this article, Timothy R. Lee focuses on the use of financial projections in ESOP valuations. The use (or misuse) of financial projections is often the most direct cause of over- or under-valuation in ESOPs.

Family Business Advisory

Mercer Capital provides financial education services and other strategic financial consulting to family businesses

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What Does the Step-Up in Basis Tax Proposal Mean for High Net Worth Individuals and Family Businesses?

The potential elimination of the step-up in basis presents an estate planning opportunity to high-net worth individuals and family business owners or should at least spur them to contemplate revisiting their estate plans.

Financial Institutions Articles

Focusing primarily on banks, the articles contained here cover a wide array of topics, including valuation basics, financial reporting issues, transaction issues, and industry commentary.

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Latest Article

Fed Rate Cut(s) – Now What?

As we enter a new downrate cycle post-pandemic, bank metrics like cost of funds (COF) and net interest margins (NIM) are in focus. In this month’s Bank Watch, we analyze changes in key metrics from the recent uprate cycle and provide historical insight into how these metrics moved in prior downrate cycles. Historical trends suggest that while margins may stabilize initially, downrate periods often compress NIM. Early 3Q24 data shows signs of stabilization, but the impact of further rate cuts remains uncertain.

Financial Reporting Valuation

We have broad experience with fair value issues related to public and private companies, financial institutions, private equity firms, start-up enterprises, and other closely held businesses. CFOs, controllers, and auditors, among others, will find the articles here useful.

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Latest Article

What to Look for in a Purchase Price Allocation

Purchase price allocation is a critical step in the transaction reporting process under ASC 805. Future amortization expense, changes in the fair value of earnout liabilities, and even goodwill impairment testing all depend on the outcome of the initial allocation. This article will provide an overview of the PPA process, discuss common intangible assets, and review some best practices and potential pitfalls.

Industry-Related

Mercer Capital’s industry articles cover a broad range of topics of interest to business owners and their professional advisors.

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Latest Article

Vulcan Materials’ Acquisition of U.S. Concrete

The acquisition of U.S. Concrete by Vulcan Materials highlights key valuation nuances in the construction industry. Evercore and BNP Paribas provided fairness opinions, using various methods like Guideline Public Company and Transaction analyses, which led to differing equity value estimates. Despite these differences, both banks agreed the $74 per share offer was fair, making this deal a notable case in M&A valuation.

Litigation Support

Mercer Capital brings over 30 years of experience to the field of dispute analysis and litigation support. These articles are written to assist attorneys and other stakeholders when facing a dispute.

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Latest Article

Expanding Reach and Elevating Expertise

As the holiday season is upon us, and with Thanksgiving around the corner, I would be remiss not to reflect and share highlights from a bustling fall season at Mercer Capital. We are very grateful and thankful for the experiences, opportunities, and interactions with many of you!

Tax Compliance

Mercer Capital has been providing objective valuations for tax compliance since 1982. Estate planners, business owners, and other professional advisors will find these articles of interest.

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Latest Article

Charting the Course of the Build Back Better Bill

By this Thanksgiving, Congress hopes to pass two of the largest bills in American history, the $1.2 trillion infrastructure bill (which was signed into law by President Biden on November 15th) along with a $1.75 trillion Build Back Better bill. While the infrastructure bill made it through Congress with minimal tax hikes, the passing of the larger reconciliation bill may still create sweeping changes to American tax policy, specific to high-net-worth individuals. This article summarizes what is in the Build Back Better bill and what it might mean for taxpayers.

Transaction Advisory

Mercer Capital has been successfully executing mergers & acquisitions for a broad spectrum of middle-market companies since the mid-1980s, as well as providing fairness opinions and other transaction-related consulting services. The articles here address topics of interest to business owners who are seeking to transition their businesses and to shareholders interested in transaction issues.

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Latest Article

Fairness Opinions: Evaluating a Buyer’s Shares from the Seller’s Perspective

In this article, we discuss the importance of fairness opinions when the primary form of consideration consists of the buyer's shares.

Update
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Latest Article

Supreme Court Upholds Connelly

The estate planning world is keenly focused on the SCOTUS decision in Connelly. Does the decision render entity-purchased life insurance useless, or at least, less useful than before? At the very least, in light of this ruling, every buy-sell agreement funded by life insurance should be reviewed by competent legal and tax counsel to ensure that the agreements operate as planned when triggered. For more information about the ruling, read Chris Mercer's informative article.