Whether a public filer, portfolio company with a private equity sponsor, or a start-up with venture capital financing, we have the proven capabilities to provide valuation consulting that will meet the requirements of your auditors and the SEC. Our work product will be what you need to make the right decisions, meet filing requirements and avoid costly delays.
Valuation Service Practice Areas
ASC 805 provides the framework for purchase price allocations in business combinations, facilitating an appraisal of assets acquired and liabilities assumed. By recognizing and accurately valuing tangible and intangible assets, and allocating the purchase price in a manner compliant with the standard, companies ensure precise financial reporting and enhanced transparency.
Understanding equity valuation is crucial for private entities, especially in accordance with ASC 718. This standard mandates how firms should value employee stock options and similar equity instruments, including Profits Interest Units (PIUs). PIUs are a unique equity compensation method for LLCs, representing a share in the company’s future profits without a stake in the current value. In many circumstances, aligning with IRC 409A is vital to avoid adverse tax consequences. Valuation methodologies under ASC 718 are multi-faceted, encompassing techniques like the Black-Scholes model and binomial lattice models. Through comprehensive equity valuation practices, private companies are better positioned to attract and retain talent, ultimately driving organizational growth and sustainability in a competitive marketplace.
ASC 350 and ASC 360 are pivotal standards governing goodwill and asset impairments, respectively, ensuring a meticulous and transparent approach towards financial reporting. ASC 350 mandates the testing of goodwill for impairment annually or more frequently if indications of potential impairment arise. Concurrently, ASC 360 prescribes a structured methodology for the impairment evaluation of long-lived assets, promoting accurate representation of an entity’s financial position.
ASC 815, governing derivatives and hedging, establishes guidelines for recognizing and measuring derivative instruments and hedging activities. Adherence to ASC 815 ensures companies accurately depict their financial position and risks associated with derivatives, fostering informed decision-making amongst stakeholders and compliance with regulatory standards.
Fresh Start Accounting (FSA) is a lifeline for companies emerging from bankruptcy, providing a clean slate financially. By revaluing assets and liabilities to fair value, FSA aligns a company’s book value closer to market realities, offering a truer financial picture. This practice, governed by regulatory frameworks, allows for a more accurate representation of a company’s financial health post-restructuring, which is crucial for investors, creditors, and other stakeholders.
ASC 323 outlines the accounting treatment for investments in equity securities and other entities, ensuring a standardized approach towards recognizing, measuring, and disclosing these investments.
ASC 842 delineates the guidelines for lease accounting, with a spotlight on the Incremental Borrowing Rate (IBR) as a pivotal metric. The IBR, essentially the interest rate a lessee would incur to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset, is crucial for lease liability determination. Adherence to ASC 842’s directives on IBR ensures a precise, market-reflective estimation, bridging the gap between accounting practices and market realities, fostering transparency, and enhancing the accuracy of financial reporting. A synthetic credit rating can be employed by companies lacking an explicit external credit rating. This synthetic rating, derived from financial metrics and comparisons to rated peers, aids in estimating a more accurate IBR by aligning a company’s credit risk with prevailing market borrowing rates.
Estate and Gift Tax Valuation is a nuanced realm that requires a precise coordination between legal mandates and financial appraisals. This valuation practice area necessitates strict accordance with tax laws and IRS guidelines.
Our experienced team has strong modeling and data skills, including machine learning techniques, with a history of completing significant consulting and corporate finance engagements. We have assisted clients with financial modeling, statistical analysis, litigation support, and transactions.
We have significant experience in the provision of valuation services for dispute resolution including buy/sell agreements, mediation, and other purposes.
Business Valuation Case Study
A client with a complex capital structure needed guidance related to the valuation of a preferred security with an embedded derivative. We assisted the client through:
- Applying applicable guidance to determine the preferred security met the requirements for separability. Bifurcated the preferred security into a host contract and embedded derivative under ASC 815
- Drafting a technical position paper outlining the position of the company and the planned course of action
- Preparing a fair value analysis under ASC 820 employing option pricing methodology
Due to our extensive experience, our client was able to address a complex accounting issue in a timely manner and deliver an analysis that met the expectation of the client’s auditor.
As discussed above, we provide valuation services including purchase price allocations, goodwill impairments, complex financial instrument valuations (earnouts, derivatives, structured products, etc.), equity-based compensation analyses, and entity and asset valuations for a national client based. For more information, please see our contact form below.