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The Financial Reporting Blog

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

Premature Obituaries and Other Mixed Signals

Accounting observers following the long and winding road to convergence of FASB and IASB accounting standards will be forgiven for experiencing a similar degree of cognitive dissonance in recent weeks. Given the glacial pace of accounting standards setting, inaction on the part of the SEC with regard to accepting IFRS-based financials from U.S. filers, and the struggles to find common ground on key accounting issues such as impairment of financial instruments, it had become clear to most that convergence would be neither easy nor quick.

Green is the Color of Inversion M&A

Jimmy Kimmel jokes that “Tax day is the day that ordinary Americans send their money to Washington, D.C., and wealthy Americans send their money to the Cayman Islands.” Tax day is now the day when Medtronic, a leading medical device company headquartered in Minneapolis, will be sending its money to Ireland. On June 15th, Medtronic and Irish healthcare company Covidien PLC announced they had signed an agreement in which the former would acquire the latter for approximately $42.9 billion. One motivation for Medtronic to acquire Covidien has to do with taxes. As part of the acquisition, Medtronic will have a new corporate tax rate of 12.5%, down from a top marginal rate of 35%, just by changing its address from the US to Ireland, using a strategy known as “inversion.”

When It Rains It Pours: Middle-Market Deal Activity Is Picking Up

With the first half of 2014 now in the rear-view mirror, the business press has started to reflect upon what occurred in the first half of 2014 and key trends emerging for the year. One emerging theme that has been commented on in several pieces is the uptick in deal activity both globally and domestically. This post discusses recent deal activity along with several long-term trends that could continue to drive middle-market deal activity.

A Game of Names: Licensing and Tradename Valuation

Reaching average audiences of 18.4 million per episode, “Game of Thrones” is the most successful show in HBO’s history. The show’s vast popularity has boosted HBO’s licensing revenue and HBO holds more than sixty different licenses, including for brands of beer, jewelry, and cosmetics. HBO has also made moves to protect the integrity of its licensed products, sending cease-and-desist letters to manufacturers of unlicensed products. The success of both the show and HBO’s ability to capitalize on licensing opportunities leads to interesting observations about the techniques used to value tradenames and licensing rights, both valuable forms of intellectual property.

What Is a B Corp?

S Corp and C Corp are familiar enough designations for businesses, but what about a B Corp? B Corps are a relatively new concept and only time will tell what risks and benefits they will ultimately confer to investors. For the time being, however, they offer business owners an alternative perspective on raising capital and offer investors opportunities to invest in companies that may otherwise not have considered it. Read this post to understand what they are.

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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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