As if the general public hadn’t lost enough faith in the stock market with recent revelations of rigged deal-making that benefits only a few, a new study shows that 25 percent of all M&A deals between public companies involve some kind of insider trading. The study, conducted by McGill University and New York University, looked at informed trading activity in equity options prior to the announcement of corporate deals. The study’s abstract states: For the target companies, we document pervasive directional options activity, consistent with strategies that would yield abnormal returns to investors with private information. This is demonstrated…
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You know how it goes. Some billionaire or corporate conglomerate throws out a huge bid for a business acquisition that everyone is certain is way over the top. It’s impossible such an outlandish offer could be profitable or even justified based on the subject entity. From the LA Clippers $2 billion sale to the next windfall for a teenage phenom who creates a gimmicky phone app; it seems as if one of these big-dollar offers hits the press every week. Regardless of how outlandish the offer might be, sometimes overkill does pay off. Inc.com looks at five huge deals that…
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The Public Company Accounting Oversight Board (PCAOB) has beefed up its requirement for auditors to clarify the nature of relationships and transactions between related parties. The new standards were instituted by the PCAOB to counteract a number of factors that it felt were contributing to financial fraud. Ultimately, the intention is to help companies avoid financial failure and reduce harm to investors. To review the three key areas the PCAOB is stressing in its revised standard, please visit Goingconcern.com. [button color=”blue” link=”http://goingconcern.com/post/pcaob-adopts-auditing-standard-no-18-crony-disclosures” target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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More than a decade in the making, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have released a converged standard on revenue recognition. Titled, “Revenue from Contracts with Customers”, the standard is designed to enhance the process of revenue reporting and improve comparability in financial statements among corporations using IFRS and U.S. GAAP. The standard also impacts the sale of nonfinancial assets to noncustomers, such as real estate. In an in-depth interview with Accounting Today, FASB member, Marc Siegel expanded on this example, stating, “Even though you might not be a home builder and…
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In a windfall for the IRS, 77,000 foreign banks have turned over data on American account holders as part of the Foreign Account Tax Compliance Act (FATCA). The U.S. devised tax law with global reach requires all foreign banks to submit full data on all American accounts with a balance of $50,000 or more. Financial institutions that are non-compliant risk being frozen out of U.S. markets and a 30 percent withholding tax on any activity taken by the bank, and even its customers. While FATCA was billed as an effort to expose overseas tax cheats, many honest Americans and…
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NACVA and the CTI are founded on excellence, superior quality, and the spirit of pioneering. We have a rich history of partnering with visionary leaders across all spectrums of the accounting and financial consulting professions regardless of affiliation with NACVA and the CTI. Simply put, we want the best of the best among our group of subject matter experts and leaders. We are thrilled to recognize this inaugural list of professionals for their accomplishments to the profession and their communities and for their contributions yet to come. Throughout 2014 you will get to know these rising stars through a…
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Barely six months into 2014, General Motors (GM) has recalled more vehicles than it sold in the five years since it filed for bankruptcy. In February alone, 2.6 million vehicles were recalled for an ignition problem that’s been attributed to at least 13 deaths. Even so, the GM stock price has remained completely neutral since April. How is the stock valuation immune to such a corporate and public relations nightmare? Visit CNNMoney to find out. [button color=”blue” link=”http://money.cnn.com/2014/05/27/investing/general-motors-stock/index.html?iid=HP_Highlight” target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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Since 2008, policymakers have kept interest rates at or near zero. All this cheap money was intended to heal the wounds of the financial crisis and encourage business owners to invest in and grow their businesses. Although this approach has helped a bit, business valuations tend to be running at higher than usual rates. AVC.com has reviewed recent data and determined whether this is a business valuation bubble forming and when it may burst. Of concern are non-linear asset value/earnings ratios that go against the norm. You can read the full article below. [button color=”blue” link=”http://avc.com/2014/03/the-bubble-question/” target=”_blank” font=”arial” align=”left”]Read Full…
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Up until now, all the corporate M&A talk for 2014 has surrounded the $45 billion deal Comcast has made for Time-Warner Cable. That’s not just because of the price tag. If approved by regulators, Comcast would end up as the internet gatekeeper for one out of every three homes and businesses in the country. That’s also a lot of power and control over internet access, quality and service for one third of the country. As media titans continue to consolidate, many are asking whether it’s wise to put so much power into so few hands. The latest questions surround an…
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After the media gaffe that disgraced LA Clippers owner, Donald Sterling, the mogul was fined $2.5 million by the NBA. There’s a misconception that he’s being required to sell the team as part of his lifetime ban from the sport, but that’s not actually true. NBA commissioner, Adam Silver, is asking the NBA Board of Governors to force Sterling to sell, which requires three quarters of the league’s owners to sign on. Common sense would ask that if Sterling has been banned from the league for life, how is it possible to own and operate a team within it? Wouldn’t…
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You could call it UBS, Part II. Back in 2009, the U.S. Department of Justice (DOJ) uncovered 4,700 names of American citizens avoiding taxes with the help of Switzerland’s largest bank, UBS. Most notably, Beanie Babies creator and billionaire, Ty Warner, was caught in the sting that cost UBS $780 million in fines and netted the IRS $6 billion in taxes and fines from a voluntary disclosure program for petrified tax cheats. This time around, it’s Switzerland’s second largest bank, Credit Suisse Group (CSG) that’s in the crosshairs of the IRS. It’s estimated that CSG is harboring offshore accounts for…
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FASB has voted to endorse a GAAP alternative to exempt private company lessees from a requirement to consolidate variable interest entities (VIE) in common control leasing arrangements. Initiated by the Private Company Council (PCC), the exemption would be allowed under specific conditions including: Private company lessee and the lessor entity are under common control Private company holds a leasing arrangement with the lessor entity All activity between entities is substantially related to the leasing activity between the lessor and private company Obligations of the lessor that are being guaranteed or collateralized by the private company could, at the inception of…
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Currently, 20 states and the District of Columbia allow some type of legal marijuana use. On January 1st of this year, supply shops all across Colorado began selling to the general public (age 21 and over), in accordance with a voter referendum. Medicinal use bills have been filed or are expected to be introduced in eight additional states, while full legalization bills like that of Colorado have been filed in Vermont and New Hampshire. California has organized a committee to review how it can institute and oversee its own legal marijuana market. The reason states are getting into the marijuana…
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While CPAs and tax attorneys must currently meet professional standards for tax preparation and other services, a recent decision by the U.S. Court of Appeals for the District of Columbia has ruled that the IRS has no authority to force continuing education or similar standards on tax preparers. The case stems from a 2011 IRS proposal of a system that would have established tax preparer registration and required all those who were paid for their services to pursue continuing education and submit to competency testing. The reason for federal oversight provided by the IRS included the claim that too many…
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According to a recent report from the Office of the Inspector General (OIG) with the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac continue to fail to properly analyze data collected from the Uniform Collateral Data Portal (UCDP) and take considerable risks when purchasing and guaranteeing single-family residential mortgages. The report charged both Freddie and Fannie with not considering all the appraisal data provided to them through the UCDP, which was created in 2010 to improve loan quality and risk management. Indications were made that 56,000 loans purchased by Freddie and Fannie between January and June of 2013…
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The Journal of Accountancy is reporting that the SEC’s strategic plan for 2014-2018 contains an initiative that involves reviewing whether a “single set of high-quality global accounting standards is achievable”. While not specifically mentioning the International Financial Reporting Standards (IFRS) the location in the 39-page document where the initiative appears also states that the consideration is part of a move to improve financial reporting practices worldwide. Although the SEC has studied the issue of allowing or mandating the IFRS for US public companies for years, administrators say rule-making duties related to federal legislation have prevented it from moving forward on…
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In a Q&A by Inc.com, former Vice President of Finance for Yahoo, Dennis Morgan, discusses the most important points of handling an acquisition, based on his $5 billion worth of deals while with the internet giant. In the article, Morgan discuss why deals go wrong, how to close the gap with a proper operating plan, where deals fall through on the operations level, the need for a strategic roadmap and the blind spots of bankers and other intermediaries during the process. [button color=”blue” link=”http://www.inc.com/ilan-mochari/dennis-morgan-yahoo-acquisition-tips.html” target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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While real estate investment trusts (REITS) have strengthened their credit profiles in the last few years, Fitch Ratings is anticipating a decline in their positive rating for 2014. According to Fitch, the upgrade/downgrade ratio for U.S. REITS has remained at 10:1 since 2011 and that most have now completed their deleveraging techniques. As a result, representatives for Fitch expressed that “credit metrics may soon reach an inflection point.” For full details on the projected analysis, please visit the Appraisal Institute. [button color=”blue” link=”http://www.appraisalinstitute.org/ano/DisplayArticle/Default.aspx?volume=15&numbr=1/2&id=21205″ target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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In an optimistic prediction from Reuters, middle market M&A activity should carry lots of opportunities throughout 2014. The positive outlook comes after a combination of more certainty with respect to Fed tapering and fewer concerns about government stalemates. The prediction also relies heavily on the observation that companies previously focused on cost savings have begun to shift their attention to strategic growth opportunities. This transition is taking place at a time when there is a large amount of capital in the pockets of both debt and equity investors. At the same time, demand for floating-rate credit assets is at record…
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In an enlightening article by McKinsey & Company, a compelling case is put forward for something you always felt was true, but couldn’t quite prove. When it comes to marketing professional services or products, good old-fashioned email is much more effective than social media. How much more effective is it? The report states that email is so significant in generating new business that it’s 40 times more effective than Facebook and Twitter combined. That isn’t a license to bombard potential clients or customers with spam. McKinsey lays out an explanation of how to maximize the benefits of email without alienating…