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The Financial Reporting Blog

A weekly update on financial reporting topics curated by Mercer Capital’s Financial Reporting Valuation professionals.

Are You GIPS-Compliant?

The Global Investment Performance Standards (GIPS®) were adopted by the CFA Institute in 1999 and are widely accepted among the international investment management industry. GIPS are a set of ethical principles based on a standardized, industry-wide approach that apply to investment management firms and are intended to serve prospective and existing clients of investment firms. While compliance by investment firms is voluntary, many investors consider GIPS compliance to be a requirement for doing business with an investment manager. Alternative managers have lagged behind the industry in claiming compliance with GIPS, but changes in the industry suggest GIPS compliance is becomingly increasingly important.

Financial Reporting Blog: Best of 2015

With the New Year just around the corner, we begin our countdown a little early. Here are this year’s 10 most popular posts from The Financial Reporting Blog.

Single-Serve Control Premium?

One of the perennial controversies in business valuation is the estimation of so-called control premiums. Following the closing of the comment period on the Appraisal Foundation’s white paper on the topic, control premiums were back in the news last week with announced acquisition of Keurig Green Mountain by JAB Holdings. The transaction’s $92 per share purchase price rewarded investors with a 78% premium to the previous closing price. Compared to the often-cited range of benchmark control premiums between 30% and 40%, the JAB offer is an outlier. As such, what can we learn about control premiums by examining the proposed Keurig transaction a bit more closely?

Updated: Valuation Best Practices for Venture Capital and Private Equity Funds

The International Private Equity and Venture Capital Valuation (IPEV) Guidelines were developed in 2005 to set out recommendations on best practices in the valuation of private equity investments. The IPEV Board is made up of leading industry associations from around the world, including the National Venture Capital Association (NVCA) and the Private Equity Growth Capital Council (PEGCC) in the United States. In October 2015, the IPEV Board published draft amendments to the existing guidelines that, if approved, will go into effect at the beginning of 2016.

Dissenting Shareholders and Bank Appraisals: Speak Now or Forever Hold Your Peace

Contrary to the silence that often occurs after the phrase – “Speak now or forever hold your peace” – is uttered in marriage ceremonies, the voice of dissent is being heard more frequently from shareholders dissenting to corporate unions. Appraisal, or dissenters’ rights, actions occur when shareholders dissent to a transaction and petition the court to determine the “fair value” of their shares. Dissenting actions are on the rise and have begun to receive considerable attention from attorneys, investors, and other deal makers.

In this post, we consider the trend of dissenting shareholders and discuss some of the basics of valuing a bank while acknowledging that each bank, transaction, and appraisal action is unique.

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Key Contacts

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Travis W. Harms, CFA, CPA/ABV

(901) 322-9760

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Lucas Parris, CFA, ASA-BV/IA

(901) 322-9784

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Sujan Rajbhandary, CFA, ABV

(901) 322-9749

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