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Declining Popularity and Uncertain Outlook for SPACs

A Shake-up in the Evolution of the Healthcare Industry? As covered in a May 2021, NACVA QuickRead article, special purpose acquisition companies (SPACs) began tremendous growth in 2020 and looked to be a new mainstream avenue of investing. Two years later, the growth of SPACs across all industries, including healthcare, has plateaued and appears to be dropping in some industries. This article will examine h ...

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Common Pitfalls to Avoid in a 409A Valuation

How to Avoid Them! A 409A valuation refers to a method of determining the value of a company's common stock. In other words, the 409A valuation is a method of calculating fair market value (FMV) according to the regulations under the Internal Revenue Code (IRC). This valuation can be carried out using various types of valuation methodologies, however, it is important to avoid pitfalls in 409A valuation when ...

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2021 Healthcare M&A in Review

Indications for 2022 After an understandable slowdown in 2020, due to the onset of the COVID-19 pandemic, merger and acquisition (M&A) activity in the healthcare industry accelerated in 2021, and the industry is expected to continue the high number of deals and high deal volume in 2022. This article will review the U.S. healthcare industry’s M&A activity in 2021 and discuss what these trends may mea ...

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Legal Update

April 2022 Two cases from Delaware and New York provide guidance to financial forensics and valuation professionals on the fiduciary duties that managers and directors owe to enterprises. The first case, In re: Multiplan Corp. Stockholders Litigation, is a class action arising from allegedly inadequate disclosure of a merger between a publicly traded special purpose acquisition company (SPAC) and a privatel ...

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SPAC Attack

Six Months In Special Purpose Acquisition Companies (SPAC) have been a prime focus of the SEC over the last six months. On April 12, 2021, the SEC issued “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” to highlight potential accounting implications and provide guidance on making the determination between classifying the warrants issue ...

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Financial Advisory Services

And S Corporation Acquisitions Analysts should be aware that one transaction tax structure that is particularly popular regarding private equity firm acquisitions is an Internal Revenue Code Section 368(a)(1)(F) reorganization of the private S corporation. The article discusses several of the reasons why owners may want to sell—and why private equity firms may want to buy—an S corporation target company. Th ...

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Considerations in Valuation of SPAC Sponsor’s Equity

Probability and Scenario Analysis In this article, the author explores considerations in valuing SPAC founders’ equity for these purposes. Marcum LLP has been active in assisting sponsors of special purpose acquisition companies (SPAC) with registration and other aspects of initial public offering (IPO). Where appropriate and permissible under the relevant independence rules, we have also assisted our non-a ...

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What is Behind the Soaring Popularity of Healthcare SPACs?

An Alternative to the IPO The popularity of special purpose acquisition companies (SPACs) has been soaring in recent years. There are 35 times as many SPACs operating in 2020 as in 2010, and these companies seem poised for greater exponential growth in the future. While many experts are predicting a continued, rapid increase in SPACs, this article will also examine the factors that could possibly slow SPAC ...

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How to Determine Fair Value

In a SPAC Merger Transaction The fair value of equity consideration issued in a merger involving a public company is generally calculated as the product of the quoted price for the individual equity instrument times the quantity issued (commonly referred to a “P times Q”). However, if the merger involves a special purpose acquisition company (SPAC), determining “P” can be subjective and may result in differ ...

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The Due Diligence Imperative

Conclusion (Part Six of a Six-Part Series) The first installment of this six-part series set forth an overview of the due diligence imperative for valuation professionals, in the context of the Four Pillars of Healthcare Value, i.e., Reimbursement, Regulatory, Technology, and Competition. The second through fifth installments reviewed the due diligence process related to the reimbursement, regulatory, compe ...

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The Due Diligence Imperative

Technology This article provides a peek at one of the six-part healthcare installments and provides an overview of the due diligence imperative for valuation professionals, in the context of the Four Pillars of Healthcare Value, i.e., Reimbursement, Regulatory, Technology, and Competition. The second, third, and fourth installments, already published, reviewed the due diligence process related to the reimbu ...

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Market Trends: 3Q17 Update

The first three quarters of 2017 were active for U.S. markets.  Major indices were characterized by low volatility and upward momentum against a backdrop of tightening monetary policy and strong economic indicators.  Private equity saw steady deal flow despite challenging market conditions, and record levels of venture capital deployment were seen amidst declining deal volume as capital continued to gravita ...

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Social Capital’s Backdoor Unicorn IPO

We have recently discussed the changing dynamics of the IPO market and startups’ shifting perspectives in regards to going public.  Public offerings have not all gone wrong this year, but latest rounds of unicorn IPO flops appear to have dampened some investors’ outlook on the traditional IPO route.  Nevertheless, unicorn investors still need liquidity and are turning to creative ways to get the IPO pipelin ...

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U.S. SEC’s Piwowar Urges Companies to Pursue Mandatory Arbitration Clauses

SEC Official Suggests IPO Paperwork Could Include Arbitration Clauses Michael Piwowar, a Republican member of the Securities and Exchange Commission, has suggested that companies be allowed to include mandatory arbitration clauses in paperwork for initial public offerings. To read the full article in Reuters, click: U.S. SEC’s Piwowar Urges Companies to Pursue Mandatory Arbitration Clauses. ...

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Webinar: How to Value an Early-Stage FinTech Company

In valuing a FinTech company, attention need be given to external factors such as unique industry dynamics and the regulatory environment as well as internal company factors such as risk exposure and shareholder preferences.  Hosted by Jay D. Wilson Jr., CFA, ASA, CBA, this webinar identifies the key value drivers for an early-stage FinTech company for investors, entrepreneurs, and potential partners. To re ...

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Is an Initial Coin Offering a New Way to Raise Money?

What to do when an IPO requires too much legal work and is subject to regulation and finding a venture capital partner takes too long and is full of unknowns?  Mint your own money, of course.  In this case, however, companies are minting digital coins rather than churning out physical objects. To read the full article in Mercer Capital's Financial Reporting Blog, click: Is an Initial Coin Offering a New Way ...

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Consequences of Complex Capital Structures—A Coda or a Bridge?

In earlier blog posts we discussed the potentially pernicious effect of a decline in the value of pre-public companies on equity compensation granted to employees.  Sujan Rajbhandary, senior member of Mercer Capital’s Financial Reporting Valuation Group, explains that unlike preferred investors, employees also depend on their employers for current income. To read the full article in Mercer Capital's Financi ...

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IPO Supply and Demand

The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb.  Megan Richards, financial analyst with Mercer Capital, explains though, that IPOs remain scarce compared to prior years. To read the full article in Mercer Capital's Financial Reporting Blog, click: IPO Supply and Demand. This article is republished from Mercer Ca ...

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Non-Traditional Venture Investors are Changing the Rules of the Game

After a steady build-up since the end of the credit crisis, 2016 is going to be marked as the year when the venture capital industry lost momentum, although not for a lack of investors.  Money has continued to pour in as riskier VC investments are still expected to outperform listed alternatives.  Madeleine Harrigan, senior financial analyst with Mercer Capital, explains what is happening. To read the full ...

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