financial technology

Financial Opinion Services

M&A performs business valuations and issues opinions confirming the fairness of a particular transaction from a financial point of view, for both publicly traded and privately held firms. Our services include analyzing and explaining the potential impact of alternative valuation techniques and transaction structures. Building on the experience of M&A executives in valuing businesses in the Digital Information Economy. M&A uses several valuation techniques to build a possible range of valuations. By providing commentary on the methodology and suitability of each valuation technique, M&A can give its clients a clear idea of the range of value of their business.

Fairness Opinions

A fairness opinion is a financial advisor's determination that the terms in a merger, acquisition, divestiture, leveraged buyout, restructuring, securities issuance or other transaction are fair from a financial point of view. A fairness opinion may be rendered on behalf of a company, its shareholders or a limited group of shareholders (i.e. public shareholders or non-controlling shareholders). Such a Fairness Opinion is evidence that fiduciary responsibilities have been discharged in good faith and with requisite expertise.

M&A assists boards of directors, investors, trustees and other corporate and organizational leaders, and governmental agencies, in fulfilling their fiduciary responsibilities by providing them with unbiased opinions about the financial fairness of pending transactions.

A comprehensive analysis, including thorough assessments of the proposed transaction as well as alternatives, allows clients to make informed decisions in the interests of their constituencies. A timely independent analysis may establish for the record that fiduciaries have adequately considered the proposed transaction and the potential alternatives, and have properly exercised their business judgment.

M&A's know-how in valuing companies and their underlying securities- including common stock, convertible and preferred securities, warrants, options, various debt instruments, and partnership and limited liability company interests, in addition to our transactional experience, enable M&A to provide our clients with the expertise required to assess complex situations encompassing virtually every type of change of control transaction, including affiliate and insider transactions, concurrent mergers and tender offers, spin-offs, synergistic mergers, as well as transactions with competing offers.

The firm is also expert at valuations involving complex assets and liabilities, and assessing intangible assets such as databases, software and libraries; contracts and franchises; copyrights; patents; licensing agreements; and marketing and distribution agreements. M&A is adept at situations that involve challenging and unusual circumstances.

Goodwill Impairment

In 2001, the Financial Accounting Standards Board (FASB) issued a series of new rules regarding accounting for business combinations and intangible assets. including SFAS rules 141, 142 and 144. Among other things, the new rules prohibit the pooling of interests method of accounting and eliminate goodwill amortization.

Under the new rules, goodwill will remain on the balance sheet but must be tested at least annually for impairment in a two-step process. Companies must allocate intangibles and goodwill to each reporting unit for impairment testing. Goodwill impairment is the difference between the fair value and carrying value.

The first step (Step 1) of a company's impairment test requires a determination of the fair value of each reporting unit and then a comparison of that fair value to the carrying value of the assets of the reporting unit. If the carrying value exceeds fair value, the reporting unit fails the Step 1 test and must conduct a second test (Step 2). Step 2 which requires the valuation of all intangibles, including the implied value of goodwill. Goodwill impairment will be charged to operating earnings.

While many financial officers welcome the end of goodwill amortization, the downside is that new rules will require more time from management in testing and managing goodwill and intangibles.

Valuation Opinions

Companies require independent assessments of their worth for a variety of reasons: to go public; merge with a partner; acquire a business; redeem shareholders' interests; determine tax liabilities; assess collateral values; configure buy/sell equity incentives; structure ESOPs; and reorganize family-owned businesses.

When companies undergo leveraged transactions, they are routinely scrutinized by stockholders, lenders, regulators, and the Internal Revenue Service. A solvency analysis by an independent expert allows the company to evaluate its financial status following the close of a proposed transaction. It may also help protect the company or its secured lenders, directors, and advisors from potential liability relating to fraudulent conveyance claims.

Professionals at M&A combine a powerful assortment of analytical tools with real-world experience to objectively determine corporate worth in today's demanding marketplace.

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