Perhaps because most CFOs would rather not need to be familiar with the special accounting rules that apply in the event of bankruptcy, the standards regarding so-called “fresh-start” accounting receive relatively little attention. For management teams working through a bankruptcy, there are a number of valuation-related considerations.
M&A and IPO activity in the U.S. ended on a high note in 2013. Merger volume picked up in the second half of the year as companies took advantage of a low interest rate environment. Greater competition for deals and rising valuations in the United States have led some private equity firms to seek returns through less expensive (and non-conventional) minority investments and partnerships rather than buyouts. With a strong finish to 2013, there is renewed optimism that the momentum achieved in M&A and the IPO markets will carry on into 2014.
On the heels of the FASB’s recent approval of certain GAAP exceptions for private companies, the FASB is re-evaluating the definition of a public company. This post summarizes the FASB proposed definition of a public company, as well as the CFA Institute’s comment letter on the topic issued October 28, 2013.
The volatility of the commercial banking industry during the financial crisis resulted in a number of banks recognizing bargain purchase gains as they acquired distressed banks. Indeed, as industries undergo cyclical changes and consolidation trends, the likelihood of strategic buyers recognizing a bargain purchase gain increases. Reviewing the methodologies and assumptions used in the initial purchase price allocation to value intangible assets and contingent liabilities is a crucial step in determining whether or not a transaction meets the criteria to be categorized as a bargain purchase.
This post summarizes current accounting issues receiving regulatory scrutiny including auditor selection and independence, the challenges involved in assigning balance sheet items, including goodwill, to various reporting units, as well as other “red flags.”
