Estimating the fair value of stock-based compensation and accounting for it properly can be complex. This post discusses the “rest and vest” scenario through the lens of the HBO program, Silicon Valley.
Estimating the fair value of stock-based compensation and accounting for it properly can be complex. This post discusses the “rest and vest” scenario through the lens of the HBO program, Silicon Valley.
The online marketplace Etsy is planning an initial public offering which could raise more than $300 million. It’s also a “Certified B Corporation” which means that in addition to focusing on building shareholder value, the company must maintain certain standards of social and environmental performance, accountability, and transparency. From a valuation perspective, what does this mean?
For privately held companies (particularly those sponsored by private equity and venture capital funds), getting the valuation process right the first time for equity compensation grant compliance is always the least expensive route in terms of both direct and indirect cost.
Companies often use contingent consideration when structuring M&A transactions to bridge differing perceptions of value between a buyer and seller, to share risk related to uncertainty of future events, to create an incentive for sellers who will remain active in the business post-acquisition, and other reasons. ASC 805 stipulates that acquiring entities are required to record the fair value of earn-outs and other contingent payments as part of the total purchase price at the acquisition date.
If valuation were an Olympic sport, fund managers and valuation specialists would expect to lose some points for the low “degree of difficulty” in their exercises over the past couple years. Buoyant equity markets, broad credit availability, historically low fixed income yields, and benign credit experience each contributed to ideal valuation conditions for private equity managers in 2013 and 2014. A reversal – or even slowing – of this trend would likely increase the scrutiny on fair value measurement for fund managers. In short, portfolio valuation marks are likely to get trickier in 2015.
