Fair value measurement has been a hot topic during the last few years, increasingly attributable to PCAOB identified audit deficiencies and heightening scrutiny over the existing fair value framework and related auditing standards. In this post, we take a look at the causes of attention and recent responses from professionals and professional organizations. To read the full article in Mercer Capital’s Financial Reporting Blog, click: PCAOB Inspection Scrutiny of Fair Value Measurement Continues. 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/.
-
-
The Appraisal Foundation’s forthcoming VFR Valuation Advisory #3, The Measurement and Application of Market Participant Acquisition Premiums (Advisory #3) sets forth best practices for measuring and evaluating the reasonableness of valuation premiums applied in (or implied by) fair value measurements of controlling interests in business enterprises. Travis Harms, Mercer Capital’s Financial Reporting Valuation Group lead, explains this topic. To read the full article in Mercer Capital’s Financial Reporting Blog, click: New Market Evidence Confirms Control Premium Best Practices. 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/.
-
In Mercer Capital’s most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, they provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments. Key highlights are covered in their Third Quarter 2017 newsletter. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Trends Influencing the Fair Value of Private Equity and Venture Capital Portfolio Investments. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit:…
-
and its Application to Enterprise Valuation The value of a firm must equal the value of the claims on its assets. In practice, this is generally expressed as the value FIRM = value DEBT + value EQUITY. Similarly, in a balance sheet prepared in accordance with generally accepted accounting principles (GAAP), assets = liabilities and equity. By comparison, an economic balance sheet is constructed using market values rather than amounts reported in accordance with GAAP, items included are classified as operating, non-operating, debt or equity-related rather than current or long-term, asset or liability, and it includes economic assets and liabilities…
-
and other Court Cases for Valuation and Litigation Support Professionals Valuation practitioners may want to spend a few hours reading a recent U.S. Tax Court case where the valuation of intangible assets was squarely addressed. This QuickRead article highlights the facts and three issues addressed in the decision.
-
In our most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, we provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments. In this blog, there are key highlights covered in our Second Quarter 2017 newsletter. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Relevant Market Trends Influencing the Fair Value of Private Equity and Venture Capital Portfolio Investments. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To…
-
Does the IRS or Anyone Care? (Part II of II) Part one of this article presented the “current method” and “option pricing method” (OPM) for allocating value to common stock for 409a valuations, and how these two methods differ in pricing of common stock. Part two examines the implied changes made by OPM and how it affects stakeholders. The article begins with a brief review of the key impacts on the valuation problem.
-
Does the IRS or Anyone Care? (Part I of II) In part one of this two-part article, the author presents the two methods for allocating value to common stock for 409a valuations, and then show how they affect the pricing of common stock. By way of background, to meet FMV, the standard of value requires measuring value under the representation of a hypothetical willing buyer and a hypothetical willing seller, both with equal knowledge of the facts, that engage in an arm’s-length transfer. Yet, the Option Pricing Method (OPM) used to price common stock is based on a model of…
-
Acknowledged king of the unicorns, Uber has raised over $8.8 billion of private funding since its founding in 2009, most recently at an equity value reported to be on the order of $70 billion. In the wake of a highly-publicized internal investigation of the culture at the ride-sharing firm and a recent personal tragedy, founder Travis Kalanick is reportedly contemplating a three-month leave of absence from the company. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Does it Matter Who Drives Uber? This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with…
-
New rules from the FASB regarding how entities will have to measure certain equity investments may lead to increased earnings volatility and additional fair value complexities. Lucas Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses five things to know about the new rules and some questions to consider. To read the full article in Mercer Capital’s Financial Reporting Blog, click: 5 Things to Know about Fair Value and Equity Investments. 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/.
-
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 indicated an increasing focus on the audit procedures related to fair value. The Securities and Exchange Commission (SEC) has also showed concerns regarding outside valuation specialists who assist management in determining fair value measurements. The increased scrutiny has put a spotlight on…
-
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 Reporting Valuation Group lead, explains. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Portfolio Valuation and Regulatory Scrutiny. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the…
-
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 entitled, Market Participant Perspectives: Selections from Mercer Capital’s Financial Reporting Blog. To learn more about this collection, read the full article in Mercer Capital’s Financial Reporting Blog, click: Market Participant Perspectives. This article…
-
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 analyzes M&A transactions in order to gain insight into the drivers and financial metrics behind the deal. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Purchase Price Allocations in the Lab Services Industry. This article is republished from Mercer Capital’s Financial…
-
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, click: Fairness Considerations for Mergers of Equals. 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/.
-
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 Financial Reporting Blog, click: Appraisal Foundation Releases Final Guidance on Fair Value Measurement of Customer-Related Assets. 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/.
-
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 is no less controversial than at its beginning. This is a pity because, in its essence, fair value data is an excellent resource for corporate finance professionals to understand more about the value…
-
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, click: A Guide to Reviewing a Purchase Price Allocation Report. 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/.
-
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-Compliant? 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/.
-
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 in the Mercer Capital’s Financial Reporting Blog, click: Dissenting Shareholders and Bank Appraisals: Speak Now or Forever Hold Your Peace This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with…