When owners of CPA firms begin to think about succession planning, the most important decision they need to make is when to bow out. Brannon Poe explores some factors to consider that can help you achieve the “Goldilocks zone” of timing. To read the full article in the Journal of Accountancy, click: Timing Your Exit.
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Affluent Americans aren’t Getting Inheritance Help, Survey Finds Even the richest Americans aren’t getting professional help and creating plans to pass wealth on to the next generation, according to a survey by RBC Wealth Management. Less than a third have a comprehensive plan, the survey found. To read the full article in InvestmentNews, click: Many Wealthy Americans haven’t Planned for the Transfer of their Assets.
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Incentive compensation works much like the proverbial carrot dangled in front of a horse. The lure of a future reward to employees encourages and propels momentum at the company level. But what happens when the carrot is dangled a little too closely? Megan Richards, financial analyst with Mercer Capital, explores this topic. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Cashing In by Checking Out. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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Personalize the Trailer to Engage the Reader An e-mail trailer provides an opportunity for the reader and firm to engage. Using mindless disclaimers at the end of an e-mail misses an opportunity to stand out and differentiate yourself and your firm. In this article, the author discusses the opportunity and provides some clever trailers used by established firms…that do work.
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Introduction Valuation analysts are retained to value closely held businesses, business ownership interest, and securities for a variety of transaction, financing, taxation, accounting, litigation, and planning purposes. For each engagement, analysts consider the three generally accepted business valuation approaches: the Income Approach, the Market Approach, and the Asset-based Approach. However, most analysts rarely apply the Asset-based Approach in the typical business valuation. This column is part of a series of discussions related to the application of the asset-based valuation approach.
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Audit teams and engagements suffer when members feel unsafe about raising questions or admitting mistakes. This blog defines what psychological safety means and the best practices to put audit team members at ease. To read the full article in the Journal of Accountancy, click: Why Audit Teams Need the Confidence to Speak Up.
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CBO: Partial Repeal of ACA Could Lead to 18M People Losing Insurance Some 18 million people could lose health insurance in the first year after a partial repeal of the Affordable Care Act, and the number could grow to 32 million by 2026, according to a Congressional Budget Office report. However, Sen. Orrin Hatch, R-Utah, said the analysis represented “a one-sided hypothetical scenario” that did not account for reforms lawmakers could implement. To read the full article in The New York Times, click: Health Law Repeal Could Cost 18 Million Their Insurance, Study Finds.
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The magnitude of the equity risk premium, or required return in excess of the risk-free rate, is a perennial question for valuation specialists. Travis Harms, Mercer Capital’s Financial Reporting Valuation Group lead, explains that the aggregate equity premium is typically broken into two pieces: 1) a market risk premium, and 2) a size premium. To read the full article in Mercer Capital’s Financial Reporting Blog, click: A Market Participant Perspective on the Size Premium. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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Engage and Assist Legal Counsel It is critical that the right person with the right expertise, training, and background be selected. This article will describe the various areas of specialization in which a forensic accountant performs, how counsel should select the right professional for the job, and the benefits of using a forensic accountant.
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A Critique of the Ibbotson Methodology In this paper, the author argues that the Size Premium in Excess of CAPM (and other similar size premium measures) should not be used by valuation practitioners because: a) it is inconsistent with the empirical evidence; b) it is constructed using a method that is inconsistent with how practitioners estimate their CAPM cost of equity; and c) it does not properly calculate the “premium” for use in a Discounted Cash Flow (DCF) analysis. Through an illustration, the author also demonstrates the challenges one faces when correcting for the latter two issues.
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A Donald Trump administration, combined with Republican control of both the Senate and the House of Representatives, makes legislation to reform the taxation of business income more likely. Hank Gutman, in this detailed report, explains that, despite the increased likelihood of legislative action, the specific content of reform legislation is more elusive than has been suggested by many, as is the path to enactment. To read the full article in the Journal of Accountancy, click: How the Election May Affect the Taxation of Business Income.
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Intense Competition for Skilled Candidates is Creating a Need for More Efficient Hiring Practices There may never be a better time for organizations to carefully scrutinize their hiring processes to make sure they are optimized for delivering the best hires. Ken Tysiac, CGMA Magazine, explains that the global job market is tilted towards candidates right now, and many candidates are not eager to wait long for a job offer. To read the full article in CGMA, click: Get an Edge in Recruiting.
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On December 27, 2016 Toshiba Corporation announced the possibility of a goodwill impairment charge related to its U.S. nuclear power plant construction business, which was acquired for $229 million in late 2015 by Toshiba’s Westinghouse Electric Company subsidiary. Karolina Calhoun, senior financial analyst with Mercer Capital, describes that both the buyer and target have been plagued by financial difficulties (and goodwill impairment charges) since that time. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Blowback from Going Nuclear: Massive Goodwill Impairment Looms at Toshiba. This article is republished from Mercer Capital’s Financial Reporting Blog. It is…
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Part II of II This is the second of a two-part article. In this second part, Edward Mendlowitz illustrates how stocks can be acquired and what factors to consider when developing or modifying a stock portfolio. Read Part I here.
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Use of Benninga-Sarig to Estimate Debt Betas in a Valuation Engagement In the July 8, 2016 In re Appraisal of DFC Global Corp. Opinion (DFC Opinion), the Court of Chancery of the State of Delaware suggested that debt betas should be estimated for individual companies and it cited Pratt and Grabowski’s Cost of Capital as a source for debt betas based on the firm’s credit rating. In addition, the Court also adopted the Hamada Formula over the Fernandez Formula to unlever betas because it believed the Hamada Formula “is widely accepted, readily understood, and not subject to dispute about whether…
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Tips for Achieving Your Financial New Year’s Resolutions The odds are against people who make New Year’s resolutions, with research suggesting that less than half of resolutions will be kept six months later. Here are tips for following through on financial objectives, beginning with setting goals that are specific, measurable, and realistic. To read the full article in CNBC, click: How to Make Your Financial New Year’s Resolutions Stick.
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The vast majority of Americans report not feeling engaged on the job. Fortunately, if you know what to look for, you can find job satisfaction. To read the full article in The New York Times, click: In Choosing a Job, Focus on the Fun.
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Capital structure decisions have long-term consequences for shareholders. The purpose of this whitepaper is to equip directors and shareholders to contribute to capital structure decisions that promote the financial health and sustainability of the company. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Capital Structure in 30 Minutes. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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Stand Out and be Noticed! In this article, Dr. Frederiksen discusses 10 steps to create a “killer” website.
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Part I of II Everyone knows there is a stock market and cannot help but hear daily updates—whether they understand it or not. Here are some basic principles and terminology that can help clients better understand the stock market and their investment decisions.