On Business Valuation The effects of inflation on consumers’ spending and psyche are well-known. The difficulties each causes in day-to-day life are often discussed. Inflation has affected everything from the cost of transportation to the cost of food and housing. What is less discussed, however, is how the current inflationary period is affecting small business owners and their companies. In this article t ...

Rising Levels of High Mental Readiness for an Exit Business owners often-times see exit planning as a complicated, overwhelming, and emotional process. Accordingly, few owners adequately prepare for this significant event. However, an exit plan is essential to help business owners manage the illiquid wealth in their businesses, particularly in turbulent times such as these marked by strife that is present i ...

in Light of LIBOR’s End Appraisal and litigation support professionals consider various rates to use as part of a financial model, including LIBOR. Near the end of July 2017, British banking regulators made waves in the business world by announcing the end of the London Interbank Offered Rate, or LIBOR, by the end of 2021. LIBOR’s end will mean the loss of a financial benchmark that is not only ubiquitous i ...

With 10-year yields up 22 basis points in October, economists anticipate an end to the Treasury bond sell-off.  "Now it's a good time to buy," said Hideo Shimomura, Mitsubishi UFJ Kokusai Asset Management's chief fund investor.  Anooja Debnath and Wes Goodman explain. To read the full article in Bloomberg, click: Treasury Selloff is About to End if Consensus Forecast is Right. ...

Boosted by solid consumer spending and improving international trade, the expansion of the U.S. economy rose to 2.9% in the third quarter, the Commerce Department said.  Nelson Schwarts reports that economists said the biggest quarterly gain in two years will probably be enough to persuade the Federal Reserve to raise interest rates in December. To read the full article in The New York Times, click: U.S. Ec ...

Since the Federal Reserve issued guidance on leveraged lending limits, borrowers and lenders have been interested in the ratio of debt-to-EBITDA in proposed financing packages.  However, banks are supposed to steer clear of deals for which the ratio is 6.0x or greater.  Travis Harms, Mercer Capital’s Financial Reporting Valuation Group lead, explains the topic of earnings adjustments. To read the full artic ...

A slump in U.S. corporate profit is the biggest concern expressed by financial professionals responding to a State Street Global Advisors survey.  James Green, group editorial director Investment Advisor Group, examines if rising stock market volatility is close behind. To read the full article in ThinkAdvisor, click: Advisors Overweight Technology, Financials Amid Earnings Concerns: SSGA. ...

Economists Predict an Interest-Rate Hike in December Ninety-two percent of the private economists surveyed by The Wall Street Journal believe the Federal Reserve will start raising interest rates at the policy meeting to be held on December 15-16.  In recent comments, Federal Reserve officials have suggested they were ready to act and have discussed the pace of future increases.  Binyamin Appelbaum, of The ...

Bank for International Settlements sees global trouble brewing   Several major factors are converging and posing a threat to the global economy, the Bank for International Settlements said in a report.  China's slowdown is hurting emerging markets dependent on commodity exports, the bank said, even as the rising value of the U.S. dollar adds stress in markets where much debt is dollar-denominated.  Bri ...

Federal Reserve officials have expressed growing optimism at the December meeting that the U.S. economy is steadily recovering.  As the price of oil continues to fall and with payrolls growing, there is a good possibility that 2015 will experience higher economic growth than currently forecast. However, the weakness of the global economy and the anemic response of foreign governments could weigh on domestic ...

In their recently released Beige Book, the Board of Governors of the Federal Reserve System break down the economic performance of the nation within seven business sectors across 12 metropolitan economic districts.  Prepared at the Federal Reserve Bank of San Francisco, the findings are based on all data collected on or before August 26, 2013.  Business sectors covered include consumer spending & touris ...

Watch Out, Wall Street!  The Federal Reserve, a Primary Banking Regulator, is Trying Harder to Spot Speculative Excesses Peter Eavis at The New York Times Dealbook reports: In a speech on Thursday, governor Jeremy C. Stein, who joined the Fed last year, focused on parts of the financial markets that show signs of overheating. He went into considerable detail, citing metrics that appear designed to spot bubb ...

Fed Buying Is Having Profound Implications. Bond Vigilantes Have Been Selling Heavily and May Continue. That Means We Still We Won't See Much of an Impact on Interest Rates. Paul Santos at Seeking Alpha claims you don't need to worry about the bond vigilantes anymore.  I, personally, have always been a big fan, and think they will return.  But hey: This is Mr. Santos' opinion piece, not mine, so I'll let hi ...

Rule Will Require a Second Appraisal in Situations Where a Home is Being Flipped for a Quick, Higher Resale  A new rule passed Jan. 15 gives mortgage lenders an additional year to institute appraisal standards for higher-risk loans, Bloomberg reported, and Appraiser News Online highlighted.  The extension is one of the revisions that regulators made to the Dodd-Frank Act to address concerns from financial f ...

The Risk-Free Rate is the Cornerstone in Finance for Estimating both the Cost of Equity and Debt Capital. In corporate finance and valuation, both academics and practitioners have long used government security (U.S. Treasury Bills and Bond) rates as proxies for risk-free rate of return. How do credit downgrades affect the risk-free rate for private company valuators? Anthony Banks explains. ...

Jon Hilsenrath at the WSJ's Real Time Economics blog captures  some interesting tidbits from Federal Reserve Chairman Ben Bernanke‘s testimony which go beyond the big question of whether the Fed will try to ease financial conditions again: ...

PE firms have recently begun to negotiate smaller equity contributions as borrowings increase, reports Matthew Sheahan at Mergers & Acquisitions.   LBO activity came to a screeching halt last summer; there were $19.7 billion issued via 34 deals to back buyouts for all of 2011, but so far this year, nine high-yield bond deals totaling $8.3 billion have been issued to back LBOs. Banks and other creditors ...