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Fair Value Measurements

In the Crosshairs of Regulators In this article, Mark Zyla of Acuitas discusses trends in fair value measurements in financial reporting and enforcement actions. Mr. Zyla notes that financial reporting is increasingly scrutinized by regulators. He observes that recent inspection reports of accounting firms that audit publicly traded entities by the Public Company Accounting Oversight Board (PCAOB) have indi ...

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Portfolio Valuation and Regulatory Scrutiny

Over the past decade, we have been retained by several investment funds to assist them in responding to formal and informal SEC investigations regarding fair value measurement of portfolio investments.  Reflecting back on those engagements yields a couple observations and reminders for funds and fund managers as they go through the quarterly valuation process.  Travis Harms, Mercer Capital’s Financial Repor ...

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Market Participant Perspectives

Mercer Capital started writing weekly about fair value reporting in 2013.  Looking back over more than three years and 150 posts, it seemed an opportune time for them to review their posts and compile what might, for lack of a better term, be called a “Greatest Hits” collection of their favorites.  Travis Harms, lead of Mercer Capital’s Financial Reporting Valuation Group, introduces you to their new book e ...

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Purchase Price Allocations in the Lab Services Industry

Mergers and acquisition activity relays much information to the general public.  Following an M&A transaction, acquirer companies conduct purchase price allocations (PPAs) to measure the fair value of various tangible and intangible assets of the acquired business.  Karolina Calhoun, senior financial analyst with Mercer Capital, discusses that the Mercer Capital Lab Services Newsletter observes and anal ...

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Fairness Considerations for Mergers of Equals

Wall Street generally does not like MOEs unless the benefits are utterly obvious and/or one or both parties had no other path to create shareholder value. In some instances, MOEs may be an intermediate step to a larger transaction that unlocks value. Jeff Davis, managing director of Mercer Capital’s Financial Institutions Group, explains. To read the full article in Mercer Capital's Financial Reporting Blog ...

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Appraisal Foundation Releases Final Guidance on Fair Value Measurement of Customer-Related Assets

The Appraisal Practice Board of the Appraisal Foundation released The Valuation of Customer-Related Assets.  As Karolina Calhoun, senior financial analyst with Mercer Capital, explains, the non-authoritative best practices guidance elaborates on valuation approaches and methodologies that can be used to measure fair value of customer-related intangible assets. To read the full article in Mercer Capital's Fi ...

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Using PPA Data as Comparables in Upcoming Valuations

The Case of Trademarks and Brands Since the adoption of fair value accounting governed by SFAS 141 (in 2001) and IFRS 3 (in 2004), hundreds of thousands of different intangible assets have been valued, audited, and reported in financial statements of public companies all over the world. After fifteen years of fair value accounting, the debate about the accuracy of such values and their relevance for readers ...

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A Guide to Reviewing a Purchase Price Allocation Report

Reviewing a purchase price allocation report can be a daunting task if you don’t do it for a living.  Lucas M. Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, presents this guide which focuses on providing an overview of the structure and content of a properly prepared purchase price allocation report. To read the full article in Mercer Capital's Financial Reporting Blog, clic ...

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Are You GIPS-Compliant?

GIPS are a set of ethical principles intended to serve prospective and existing clients of investment firms.  However, compliance is the question.  Mary Grace McQuiston, senior financial analyst with Mercer Capital, discusses this issue and the GIPS Guidance Statement on Alternative Strategies and Structures. To read the full article in Mercer Capital's Financial Reporting Blog, click: Are You GIPS-Complian ...

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

Being on the rise, dissenting actions are catching the eye of investors, attorneys, and other deal makers.  Jay D. Wilson, Jr., senior member of Mercer Capital’s Depository Institutions practice, takes a look at why it is important an appraiser preparing a valuation of a bank in an appraisal action understand both valuation techniques and the banking industry. To read more about the results of this report i ...

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Dissenting Shareholder Appraisal Rights and Shareholder Oppression Claims

Similarities and Differences in Securities Valuation Over the past three decades, the number of both dissenting shareholder appraisal rights claims and shareholder oppression claims have increased significantly. This increase has created a demand for forensic-related business and security valuation services. Valuation analysts are not legal counsel, of course. However, valuation analysts who practice in thi ...

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Turning on the Fasten Seat Belt Sign: Fair Value Measurement in Turbulence

Is the degree of difficulty on the rise for fair value measurements?  Travis Harms, leader of Mercer Capital’s Financial Reporting Valuation Group, looks at some interesting current trends   To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: Turning on the Fasten Seat Belt Sign: Fair Value Measurement in Turbulence.  This article is republished from M ...

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Fair Value Accounting

Moving from Facts to Opinion? ASC 820 under US GAAP and IFRS 13 issued by IASB provide a principal based framework for fair value measurement. Though fair value measurement guidance in US GAAP and IFRS are substantially in the same line, some minor differences exist. This article discusses the IFRS 13 and challenges in its implementation. ...

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Portfolio Marks: 2Q15 Outlook

Key performance metrics for BDCs can help provide insight to the upcoming valuation marks.  Travis Harms, leading Mercer Capital’s Financial Reporting Valuation Group, looks at fair value measurement in relation to credit spreads and what may be expected in the upcoming portfolio marks. Read more about the results of this report in the Mercer Capital's Financial Reporting article, Portfolio Marks: 2Q15 Outl ...

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How to Value Venture Capital Portfolio Investments

This blog discusses the four-step process for providing fair value marks for venture capital fund investments in pre-public companies: 1) examining the most recent financing round economics, 2) adjusting valuation inputs to the measurement date, 3) measuring fair value, and 4) reconciling  and testing for reasonableness.   Sujan Rajbhandary, vice president in Mercer Capital’s Financial Reporting Valuation G ...

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Unique Issue in Standards for Distressed Business Valuation

Part 2: AIRA Issues New Standards for Distressed Business Valuation In this second article on AIRA Standards, the author discusses unique issues valuing distressed companies. These include the standard of value used, the premise of value, the intended use of the valuation, and cost of capital. The author also discusses the use and level of acceptance of the Industry Risk Premium (IRP) in the bankruptcy/reor ...

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Valuation of Contingent Consideration in M&A Transactions

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 says Lucas M. Parris, a senior member of Mercer Capital’s Financial Reporting Valuation Group ...

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If Valuation Were an Olympic Sport

There are clear signs that the “easy” portfolio valuations that have existed in 2013 and 2014 may be coming to an end in 2015.  Travis W. Harms who leads Mercer Capital’s Financial Reporting Valuation Group, discusses the expansion in multiples and their role in the favorable equity market returns over the past two years.  He also discusses the impact of high-yield credit spreads, the energy sector, and loa ...

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The Imperative of Considering the Concept of Highest and Best Use in Healthcare Valuation (Part 1 of 2)

Traditional valuation methodologies have relied upon the analysis of historical accounting and other data as predictive of future performance and value. However, this may not hold true with every economy, industry, or even every enterprise within an industry, over time. For example, the turbulent status of the healthcare industry over the last five decades, since the passage of Medicare in the 1960s, has in ...

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