Mergers & Acquisitions: New Survey Suggests Valuation Professionals Can do More than Just Deal Multiples
In a survey of corporate CEOs and Board members completed last week, a two-thirds majority say they are more likely to obtain a fairness opinion in an M&A deal, given the current lawsuit-laden business climate. Half of respondents believe that litigation due to perceived unfair valuations will increase, according to the survey—conducted by mergermarket on behalf of Houlihan Lokey Howard & Zukin (New York). For a copy of the survey, go to www.hlhz.com/email/2006/pdf/hlhz_study_mergermarket.pdf.
More importantly: No one surveyed expects the level of lawsuits to decline—leaving the door open for the valuation professionals to enter the M&A deal rooms. And fairness opinions aren’t the only way to boost this profitable work: There’s also competitive intelligence profiles, customer surveys, talking with suppliers and competitors, etc. Says a BV insider, “Those who know about the different dimensions of value creation can also make a significant contribution during the [M&A] due diligence process.”
IRS Interest Rates Inch Upward
Beginning with the July 1, 2006 calendar quarter, the IRS interest rates will go up slightly. For corporations, the overpayment rate will be 7% (up from 6%). For overpayments exceeding $10,000, corporations will receive 5.5% interest (up from 4.5%). On the flip side, interest rates for small corporate underpayments will be 8% (up from 7%); and 10% for the larger overpayments (up from 9%).
For individual taxpayers, the rate for under- and over-payments will be 8% (up from 7%).
Best Sources for Reasonable Compensation Criteria
Are too many BV appraisers acting as compensation experts? That’s what attorney Don Schiller believes (Schiller DuCanto and Fleck; Chicago), according to his comments at last month’s national conference on divorce by the AICPA/AAML in Las Vegas. But a compensation expert can cost more than the appraisal, and so most BVers have to depend on industry data and “homogenized” surveys, according to Schiller and his co-presenter, Jim Hitchner. Their comments, plus a “12-point” checklist to test your compensation expertise, are featured in the July Business Valuation Update™. For a free copy of the article—which includes the most current, comprehensive list of compensation resources—go to www.bvresources.com/BVWireCentral.
To “bullet-proof” your compensation conclusions, don’t miss the June 29, 2006 BVR telephone conference on reasonable compensation, which features Ron Seigneur, Michael Paschall, Rod Burkert, and Ralph Ostermueller—and includes tips/techniques to improve support for required adjustments, data applications, and more. To register, go to www.bvresources.com/conference.
AICPA Offers Members Flex-Work Toolkit
At the AICPA’s Practitioners Symposium in Las Vegas last week, Institute chair Leslie Murphy unveiled its new Flexwise™ offering, an on-line, flexible work “toolkit” which covers policy and procedure guidelines, orientation training and best practices in telecommuting, job sharing and compressed schedules. The cost is $15 per-employee for AICPA members ($18 for non-members). www.cpa2biz.com/flexwise
New Updates to FMV Restricted Stock™ Study
The FMV Restricted Stock Study™ now contains 476 total transactions (with transaction dates through March 2005). A Web-based tool for quantifying marketability discounts in business valuations, appraisals, venture capital and M & A deals, the study is available from FMV Opinions, Inc. only at BVResources.com.
Also: The FMV DLOM Calculator (which uses the underlying restricted stock data of the FMV study), will be available on a single-search basis later this summer at BVResources. We’ll keep you posted on the precise timing.
Two Great Sources for Current U.S. Economic Data
We’ve recently come across these two excellent sites for state-by-state economic statistics:
• StateMaster allows you to research and compare a multitude of different data on US states, from sources including the U.S. Census Bureau, the FBI, and the National Center for Educational Statistics: http://www.statemaster.com/index.php
• State Profiles provide a quarterly summary of state banking and economic conditions: http://www.fdic.gov/bank/analytical/stateprofile/index.html
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