Pre-Sale Accounting Best Practices for Buyers and Sellers In today’s market, it is especially important that prospective acquirers of emerging companies understand exactly what they are purchasing and how to allocate the purchase price among the assets acquired and liabilities assumed. This article discusses the importance of quality of earnings and impact on the acquisition price. As buyers tighten their purse strings in a volatile economy, parties on both sides of startup M&A deals must ensure they are prepared to effectuate the transaction from a financing perspective as well as address the related financial reporting and other accounting implications. This…
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(Part V) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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(Part IV) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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(Part III) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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(Part II) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every person in…
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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 how SPACs grew to their 2021 height in popularity and their future in a post-COVID-19 world. As covered in a May 2021, NACVA QuickRead article, special purpose acquisition companies (SPACs) began tremendous growth in 2020 and…
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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 carrying out the valuation to obtain a more accurate result. In this article, we will discuss some of the most common mistakes that can be made when carrying out a 409A valuation,…
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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 mean for 2022. After an understandable slowdown in 2020, due to the onset of the COVID-19 pandemic,[1] merger and acquisition (M&A) activity in the healthcare industry accelerated in 2021, and the industry is expected to…
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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 privately held operating company. The second case, The People of the State of New York v. The National Rifle Association, et al., is a civil action brought by the state attorney general against a nonprofit corporation and certain of its…
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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 issued by SPACs as equity versus a liability. Below, the authors navigate through the valuation process of SPAC warrants and the frequent issues seen thus far in SPAC warrant valuations. Special Purpose Acquisition Companies (SPAC) have been a prime focus of…
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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. The article describes what analysts need to know about the benefits to the S corporation sellers of a Section 368(a)(1)(F) reorganization as one step in the private company sale transaction. In addition, it also describes what analysts need to know…
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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-audit SPAC-sponsoring clients and their tax counsel with valuation issues related to founders’ equity for gifting and estate planning purposes. In this article, we will explore considerations in valuing SPAC founders’ equity for these purposes. A Primer on SPACs A SPAC is a…
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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 growth and diminish their future prospects. 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,…
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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 different interpretations of U.S. GAAP fair value between the valuation specialist and the parties involved in the deal. Introduction The fair value of equity consideration issued in a merger involving a public company is generally…
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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, competitive, and technological environments, respectively. This series conclusion will review the due diligence process generally as it relates to the healthcare industry. For more detailed information, see the September/October issue of The Value Examiner.
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Finding Value in the Continuum of Care Under Changing Healthcare Reform
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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 reimbursement, regulatory, and competitive environments, respectively. This fifth installment reviews the due diligence process as it relates to technology in the healthcare industry. For more detailed information, see the July/August issue of The Value Examiner.
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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 gravitate to the unicorns. With one quarter left, we take a look at market activity during the first three quarters of 2017. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Market Trends: 3Q17 Update. This article is…
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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 pipeline flowing again. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Social Capital’s Backdoor Unicorn IPO. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To…