Mercer Capital has performed in-depth financial analyses for clients pursuing bankruptcy reorganization in order to explore strategic alternatives and inform negotiations with various stakeholders. We have considerable experience in providing clients with reliable, relevant and reasonable valuations of businesses and intangible assets, including within the context of financial statements reporting requirements.
Managers at companies contemplating a Chapter 11 bankruptcy and restructuring need to juggle an extraordinary set of additional responsibilities – evaluating alternate strategies, negotiating with various stakeholders, implementing new and difficult business plans, and satisfying regulatory and reporting requirements – while continuing to operate the business.
The restructuring process may require management teams to consider significant operational changes. Restructuring companies also need to negotiate with a number of constituencies simultaneously. While the changes and negotiations may require difficult decisions, the restructuring process can be an opportunity for many distressed companies to construct sound operational and financial foundations for the future.
Restructuring businesses need to satisfy various regulatory and reporting requirements, including reorganization plans and fresh-start accounting. Financial projections and business valuations are integral components of bankruptcy reorganization plans. Various stakeholders may file and pursue competing reorganization plans, which may entail additional negotiations.
Finally, companies emerging from Chapter 11 bankruptcy may be required to determine the fair value of certain assets in conformity with ASC 805, Business Combinations. Similar to a purchase price allocation, the excess of reorganization value over the sum of fair values of tangible and identifiable intangible assets is recorded as goodwill.