Financial Opinions
The depth and breadth of our experience in rendering financial opinions reaches to transactions of all levels of complexity and deal sizes from the hundreds of thousands to the tens of billions. The quality and sophistication of our analysis as well as the timeliness of our work product adds a high level of confidence and assurance to any transaction requiring a Fairness Opinion, Solvency Opinion, Capital Adequacy Opinion or Reasonably Equivalent Value Opinion.
Solvency Opinions
Solvency opinions issued by Murray Devine provide an independent third-party analysis of the impact that a proposed transaction will have on a company’s current and ongoing financial viability. Solvency opinions are typically required as additional due diligence by a company’s lender or board of directors in connection with a buyout, recapitalization, dividend or other similar transaction involving leverage.
View recent Solvency Opinion engagements
Solvency opinions issued by Murray Devine provide an independent third-party analysis of the impact that a proposed transaction will have on a company’s current and ongoing financial viability. Solvency opinions are typically required as additional due diligence by a company’s lender or board of directors in connection with a buyout, recapitalization, dividend or other similar transaction involving leverage.
View recent Solvency Opinion engagements
Fairness Opinions
Fairness opinions provided by Murray Devine add an independent third-party analysis as to the fairness, from a financial point of view, of a proposed acquisition, merger, divestiture or other critical business transaction as well as any transaction involving affiliates. Fairness opinions are typically used to support decision making by officers, directors and other fiduciaries to assist equity and other stakeholders in evaluating the terms of such a transaction.
View recent Fairness Opinion engagements
Fairness opinions provided by Murray Devine add an independent third-party analysis as to the fairness, from a financial point of view, of a proposed acquisition, merger, divestiture or other critical business transaction as well as any transaction involving affiliates. Fairness opinions are typically used to support decision making by officers, directors and other fiduciaries to assist equity and other stakeholders in evaluating the terms of such a transaction.
View recent Fairness Opinion engagements
Capital Adequacy Opinions
Capital adequacy opinions issued by Murray Devine provide an independent third-party analysis as to whether a company has sufficient capital under applicable state law to make a proposed distribution. Capital adequacy opinions are often required as additional due diligence by a company’s board of directors in conjunction with decisions to declare a dividend, repurchase stock, spinoff of a subsidiary or otherwise make a distribution to equity holders.
Capital adequacy opinions issued by Murray Devine provide an independent third-party analysis as to whether a company has sufficient capital under applicable state law to make a proposed distribution. Capital adequacy opinions are often required as additional due diligence by a company’s board of directors in conjunction with decisions to declare a dividend, repurchase stock, spinoff of a subsidiary or otherwise make a distribution to equity holders.
Reasonably Equivalent Value Opinions
Reasonably equivalent value opinions are closely related to fairness opinions and solvency opinions and are typically issued to a board of directors of a financially distressed parent. Federal and state fraudulent transfer statues provide that a seller must receive reasonably equivalent value or fair value for assets being sold. In the case of a leveraged transaction, there is a presumption that reasonably equivalent value is not being received and a board of directors will often require a solvency opinion. If the seller is financially distressed and the likelihood of the seller being solvent becomes diminished, a board will obtain a reasonably equivalent value on the asset transfer.
Reasonably equivalent value opinions are closely related to fairness opinions and solvency opinions and are typically issued to a board of directors of a financially distressed parent. Federal and state fraudulent transfer statues provide that a seller must receive reasonably equivalent value or fair value for assets being sold. In the case of a leveraged transaction, there is a presumption that reasonably equivalent value is not being received and a board of directors will often require a solvency opinion. If the seller is financially distressed and the likelihood of the seller being solvent becomes diminished, a board will obtain a reasonably equivalent value on the asset transfer.
Financial Reporting
The convergence of US and international accounting standards is changing US financial reporting from a rule-dominated system to a principal-based accounting system that emphasizes the substance of transactions over their form. This migration to a more subjective system places an increased premium on the ability to make consistently sound and readily supportable valuation judgments. Murray Devine is able to draw on decades of experience with illiquid assets to provide our clients with clear and supportable fair value conclusions and help them and their auditors to develop methodologies that will comply with the new reporting standards.
FASB ASC 805 Business Combinations (formerly FAS 141(R))
FASB ASC 805 Business Combinations and its predecessor FAS 141(R) require the recognition and fair value measurement of all identifiable assets, liabilities and goodwill from a business combination. FASB ASC 805 applies to all annual periods beginning after December 15, 2008 and introduces a number of significant changes to accounting for business combinations including the following:
View recent Business Combinations engagements
FASB ASC 805 Business Combinations and its predecessor FAS 141(R) require the recognition and fair value measurement of all identifiable assets, liabilities and goodwill from a business combination. FASB ASC 805 applies to all annual periods beginning after December 15, 2008 and introduces a number of significant changes to accounting for business combinations including the following:
- More transactions and other events must be accounted for as business combinations requiring valuations
- Transition from company assumptions to “market participant” assumptions changes key valuation inputs (e.g. acquired trade names may require valuation even if not to used by acquirer)
- Contingent liabilities and contingent consideration will require advanced valuation modeling
- Valuation work will need to be started during the pre-transaction phase to avoid retrospective financial statement adjustments
View recent Business Combinations engagements
FASB ASC 820 Fair Value Measurements and Disclosures (formerly FAS 157)
FASB ASC 820 Fair Value Measurements and Disclosures (formerly FAS 157) was issued to clarify the term “fair value”, a concept that is used throughout the FASB literature. FASB ASC 820 establishes a new framework for measuring and disclosing assets and investment values and has significantly changed the financial reporting landscape of entities holding illiquid investments. The increased volatility in the debt and equity markets has brought fair value reporting under a firestorm of criticism and the FASB and SEC have responded by issuing various additional interpretations and clarifications of the fair value concept. These developments have made it more critical than ever to obtain a third-party firm to provide a fair value of illiquid investments. Murray Devine values all classes of illiquid securities (both with and without imbedded options) in compliance with FASB ASC 820 including common stock, preferred stock, LLC and partnership interests, senior and subordinate debt, distressed debt, warrants and options. Murray Devine provides FASB ASC 820 valuations at the company level for private equity and hedge funds investments. Murray Devine also provides such valuations on a portfolio level for private equity funds, hedge funds, CDOs, BDCs and fund of funds’ direct investments and has been a leader in helping companies and funds comply with the evolving fair value requirements of FASB ASC 820. (Also see Portfolio Valuations.)
FASB ASC 820 Fair Value Measurements and Disclosures (formerly FAS 157) was issued to clarify the term “fair value”, a concept that is used throughout the FASB literature. FASB ASC 820 establishes a new framework for measuring and disclosing assets and investment values and has significantly changed the financial reporting landscape of entities holding illiquid investments. The increased volatility in the debt and equity markets has brought fair value reporting under a firestorm of criticism and the FASB and SEC have responded by issuing various additional interpretations and clarifications of the fair value concept. These developments have made it more critical than ever to obtain a third-party firm to provide a fair value of illiquid investments. Murray Devine values all classes of illiquid securities (both with and without imbedded options) in compliance with FASB ASC 820 including common stock, preferred stock, LLC and partnership interests, senior and subordinate debt, distressed debt, warrants and options. Murray Devine provides FASB ASC 820 valuations at the company level for private equity and hedge funds investments. Murray Devine also provides such valuations on a portfolio level for private equity funds, hedge funds, CDOs, BDCs and fund of funds’ direct investments and has been a leader in helping companies and funds comply with the evolving fair value requirements of FASB ASC 820. (Also see Portfolio Valuations.)
FASB ASC 718 Compensation – Stock Compensation (formerly FAS 123(R))
Murray Devine has extensive experience in valuing options and other equity-based compensation for financial reporting purposes under FASB ASC 718. In many private transactions, the purchaser of a company issues to the company’s management equity securities or options that are “out of the money”. FASB ASC 718 establishes the framework for assigning value to such equity-based compensation. Murray Devine’s longtime clients include many of the country’s premier private equity, hedge and venture funds that utilize management compensation criteria involving complex capital structures and multiple classes of stock. Working with these funds and their auditors, Murray Devine has developed the expertise required to understand the most complex compensation plans and apply valuation methodologies that conform to AICPA guidelines.
View recent Stock Compensation engagements
Murray Devine has extensive experience in valuing options and other equity-based compensation for financial reporting purposes under FASB ASC 718. In many private transactions, the purchaser of a company issues to the company’s management equity securities or options that are “out of the money”. FASB ASC 718 establishes the framework for assigning value to such equity-based compensation. Murray Devine’s longtime clients include many of the country’s premier private equity, hedge and venture funds that utilize management compensation criteria involving complex capital structures and multiple classes of stock. Working with these funds and their auditors, Murray Devine has developed the expertise required to understand the most complex compensation plans and apply valuation methodologies that conform to AICPA guidelines.
View recent Stock Compensation engagements
FASB ASC 350 (formerly FAS 142), FASB ASC 360 (formerly FAS 144), IFRS 3 & IAS 36 – Intangibles – Goodwill and Other
FASB ASC 350 (formerly FAS 142), FASB ASC 360 (formerly FAS 144), IFRS 3 and IAS 36 require that goodwill, intangible assets and other long-lived assets be tested for impairment with FASB ASC 350 requiring testing at least annually and FASB ASC 360 requiring testing upon a triggering event such as the loss of a major customer or contract. Goodwill impairment testing is required to be performed at a reporting unit level, which may be one or more levels below a segment reporting level and is usually determined at the time of a business combination valuation. Goodwill testing can be a two-step process. The fair value of goodwill is initially tested by determining the fair value of the net equity of an entity using business enterprise valuation methodology. If the result is that the book net equity is impaired, then the recorded and unrecorded tangible and intangible assets are revalued using business combination valuation guidelines resulting in a reduction of recorded goodwill. Murray Devine’s extensive industry and financial reporting experience allows us to implement such testing procedures with the highest degree of efficiency and reliability.
FASB ASC 350 (formerly FAS 142), FASB ASC 360 (formerly FAS 144), IFRS 3 and IAS 36 require that goodwill, intangible assets and other long-lived assets be tested for impairment with FASB ASC 350 requiring testing at least annually and FASB ASC 360 requiring testing upon a triggering event such as the loss of a major customer or contract. Goodwill impairment testing is required to be performed at a reporting unit level, which may be one or more levels below a segment reporting level and is usually determined at the time of a business combination valuation. Goodwill testing can be a two-step process. The fair value of goodwill is initially tested by determining the fair value of the net equity of an entity using business enterprise valuation methodology. If the result is that the book net equity is impaired, then the recorded and unrecorded tangible and intangible assets are revalued using business combination valuation guidelines resulting in a reduction of recorded goodwill. Murray Devine’s extensive industry and financial reporting experience allows us to implement such testing procedures with the highest degree of efficiency and reliability.
Portfolio Valuations
Murray Devine has long been the “go to” portfolio valuation services firm for private equity and hedge funds, funds of funds, market value CDOs, BDCs, mezzanine funds, structured vehicles and public companies holding illiquid portfolio investments such as senior and subordinated debt, preferred and common stock, partnership and LLC interests, warrants and options. Our portfolio valuations are used for a variety of purposes including the periodic reporting to investment committees, lenders and limited partners, the establishment of offering prices for structured products by investment bankers and compliance with rating agency requirements. In all of our engagements, we tailor our services to provide timely, cost-efficient, transparent and robust valuation services.
Murray Devine has been at the forefront of portfolio valuation services since the 1990’s when we pioneered portfolio valuation methodologies for structured product clients required to provide quarterly valuations to rating agencies. Working together with our clients and the rating agencies, we developed protocols that were both cost-effective for the clients and acceptable to the rating agencies. In subsequent years, we have developed similar rating agency approved methodologies to assist clients securitizing their holdings in large numbers of limited partnership interests in private equity, mezzanine, venture and real estate partnerships.
Recent developments have only increased the need for the third-party valuations of illiquid securities that Murray Devine provides. Among these developments are the issuance of various pronouncements on the “fair value” valuation of illiquid investments under FASB ASC 820 Fair Value Measurements and Disclosures (formerly FAS 157) and the “Best Practices for the Hedge Fund Industry” report of the Asset Mangers’ Committee to the President’s Working Group on the Financial Markets recommending “robust valuation procedures” for illiquid and hard-to-value assets.
The developments have placed a tremendous strain on the financial reporting groups of entities holding numerous illiquid portfolio investments. Developing the required valuations of illiquid investments as well as supporting such valuations to investment committees, investors and, most particularly, auditors can create a significant “time sink” for staff and management whose time can be more profitably spent on core investment oversight responsibilities and other duties.
View recent Portfolio Valuation engagements
Murray Devine has long been the “go to” portfolio valuation services firm for private equity and hedge funds, funds of funds, market value CDOs, BDCs, mezzanine funds, structured vehicles and public companies holding illiquid portfolio investments such as senior and subordinated debt, preferred and common stock, partnership and LLC interests, warrants and options. Our portfolio valuations are used for a variety of purposes including the periodic reporting to investment committees, lenders and limited partners, the establishment of offering prices for structured products by investment bankers and compliance with rating agency requirements. In all of our engagements, we tailor our services to provide timely, cost-efficient, transparent and robust valuation services.
Murray Devine has been at the forefront of portfolio valuation services since the 1990’s when we pioneered portfolio valuation methodologies for structured product clients required to provide quarterly valuations to rating agencies. Working together with our clients and the rating agencies, we developed protocols that were both cost-effective for the clients and acceptable to the rating agencies. In subsequent years, we have developed similar rating agency approved methodologies to assist clients securitizing their holdings in large numbers of limited partnership interests in private equity, mezzanine, venture and real estate partnerships.
Recent developments have only increased the need for the third-party valuations of illiquid securities that Murray Devine provides. Among these developments are the issuance of various pronouncements on the “fair value” valuation of illiquid investments under FASB ASC 820 Fair Value Measurements and Disclosures (formerly FAS 157) and the “Best Practices for the Hedge Fund Industry” report of the Asset Mangers’ Committee to the President’s Working Group on the Financial Markets recommending “robust valuation procedures” for illiquid and hard-to-value assets.
The developments have placed a tremendous strain on the financial reporting groups of entities holding numerous illiquid portfolio investments. Developing the required valuations of illiquid investments as well as supporting such valuations to investment committees, investors and, most particularly, auditors can create a significant “time sink” for staff and management whose time can be more profitably spent on core investment oversight responsibilities and other duties.
View recent Portfolio Valuation engagements
Intangible Asset Valuations
Murray Devine provides intangible asset studies including valuations of patents, trademarks, trade names, non-compete agreements, in-process research and development and customer and subscriber lists. As our economy continues to shift toward service- and technology-based businesses, intellectual property assets are becoming increasingly important elements of many companies' total value. Our analyses are used in establishing a fair basis for royalty rates, acquisition accounting, loan collateralization, tax accounting, and other purposes.
Murray Devine provides intangible asset studies including valuations of patents, trademarks, trade names, non-compete agreements, in-process research and development and customer and subscriber lists. As our economy continues to shift toward service- and technology-based businesses, intellectual property assets are becoming increasingly important elements of many companies' total value. Our analyses are used in establishing a fair basis for royalty rates, acquisition accounting, loan collateralization, tax accounting, and other purposes.
Fresh Start Accounting (SOP 90-7)
SOP 90-7 was issued in 1990 to provide guidance on financial reporting by entities that file petitions with the Bankruptcy Court and expect to reorganize as a going concern. Under SOP 90-7, entities meeting certain criteria are required to adopt fresh-start reporting. Under fresh-start reporting the reorganization value of an entity should be allocated to the entity’s assets in conformity with the procedures specified by FASB ASC 805 Business Combinations (formerly FAS 141(R)).
SOP 90-7 was issued in 1990 to provide guidance on financial reporting by entities that file petitions with the Bankruptcy Court and expect to reorganize as a going concern. Under SOP 90-7, entities meeting certain criteria are required to adopt fresh-start reporting. Under fresh-start reporting the reorganization value of an entity should be allocated to the entity’s assets in conformity with the procedures specified by FASB ASC 805 Business Combinations (formerly FAS 141(R)).
Equipment Appraisals
Murray Devine has extensive experience in valuing tangible personal property in a wide variety of industries. We offer detailed equipment appraisals for asset-based loan collateralization, financial reporting, tax compliance, insurance and other needs. Our clients utilize our forecasts of properties' fair market values, residual values and economic useful lives to negotiate profitable leasing terms and to meet IRS and FASB standards.
Murray Devine has extensive experience in valuing tangible personal property in a wide variety of industries. We offer detailed equipment appraisals for asset-based loan collateralization, financial reporting, tax compliance, insurance and other needs. Our clients utilize our forecasts of properties' fair market values, residual values and economic useful lives to negotiate profitable leasing terms and to meet IRS and FASB standards.
Tax Reporting
Tax reporting requirements are becoming increasingly complex with valuation playing an ever more important role in establishing optimal tax structures. Murray Devine brings to its clients the necessary experience and skills not only to provide critical valuation solutions, but to subsequently support and defend those solutions should the need arise.
Purchase Price Allocation (Section 338(h)(10))
A Section 338(h)(10) valuation of assets is required when shareholders dispose of an investment in a subchapter S corporation through an asset sale. Any gain in such a transaction will be taxed partially as a capital gain and partially as ordinary income depending on the difference between the fair value of the assets and their taxable book value.
A Section 338(h)(10) valuation of assets is required when shareholders dispose of an investment in a subchapter S corporation through an asset sale. Any gain in such a transaction will be taxed partially as a capital gain and partially as ordinary income depending on the difference between the fair value of the assets and their taxable book value.
Section 409(a)
Section 409(a) of the Internal Revenue Code provides that a stock option granted under a nonqualified deferred compensation plan that has an exercise price equal to less than the fair market value of the stock as of the date of the grant constitutes taxable deferred compensation. The adverse consequences of such an arrangement include taxation at the time of vesting and a 20% penalty. A third party valuation can be an important part of the proper structuring of stock option plans so that such negative consequences are avoided.
Section 409(a) of the Internal Revenue Code provides that a stock option granted under a nonqualified deferred compensation plan that has an exercise price equal to less than the fair market value of the stock as of the date of the grant constitutes taxable deferred compensation. The adverse consequences of such an arrangement include taxation at the time of vesting and a 20% penalty. A third party valuation can be an important part of the proper structuring of stock option plans so that such negative consequences are avoided.
Legal Entity Valuations
Legal entity valuations are often needed to allocate the purchase price of a business combination in order to establish a tax basis in the legal entity for the acquirer. Legal entity valuations are also needed when structuring and allocating acquisition debt to the acquired legal entities to ensure that their capital structures are reasonable from a debt/equity mix.
Legal entity valuations are often needed to allocate the purchase price of a business combination in order to establish a tax basis in the legal entity for the acquirer. Legal entity valuations are also needed when structuring and allocating acquisition debt to the acquired legal entities to ensure that their capital structures are reasonable from a debt/equity mix.
Estate & Gifting Valuations
The high tax rates in the federal transfer tax system make valuations for gift and estate purposes of high importance to business owners, executives and other high net worth individuals. Murray Devine’s valuation services include securities valuations and discount studies that are used for estate and gift tax filings, buy-sell agreements and charitable contribution accounting.
The high tax rates in the federal transfer tax system make valuations for gift and estate purposes of high importance to business owners, executives and other high net worth individuals. Murray Devine’s valuation services include securities valuations and discount studies that are used for estate and gift tax filings, buy-sell agreements and charitable contribution accounting.
NOL Limitation Analyses
IRC Section 382 imposes restrictions on the use of a corporation’s net operating losses after an ownership change. To minimize the impact of the limitation on net operating loss carry forwards, a valuation of the subject legal entity needs to be performed.
IRC Section 382 imposes restrictions on the use of a corporation’s net operating losses after an ownership change. To minimize the impact of the limitation on net operating loss carry forwards, a valuation of the subject legal entity needs to be performed.
Advisory Services
Bankruptcy and Reorganization Services
Murray Devine is able to provide valuation advisory services in a variety of reorganization and bankruptcy contexts including out-of-court restructuring and pre-bankruptcy planning, valuation support for unsecured creditors committees and other bankruptcy constituencies, liquidation analyses for chapter 11 plan confirmations, NOL limitation analyses and post-confirmation fresh start accounting.
Fiduciary Advisory Services
Murray Devine's valuation services are frequently used by ESOP trustees and other independent fiduciaries to provide third-party support for their actions. Because of the depth of our experience in valuing all types of securities, we are well qualified to provide valuations and fairness opinions that assist such fiduciaries in the negotiation and approval of transfers of employer securities held by ESOPs and other types of transactions in which a fiduciary is required to make judgments based on the value of assets under its care.
Litigation Support
Murray Devine provides litigation support and expert witness services in a variety of contexts including dissenting shareholder lawsuits, economic damage assessments, fraudulent conveyance claims, buy-sell agreement disputes and other valuation-related situations. Murray Devine's senior staff includes CPAs, MBAs and attorneys who are able to assist our clients and their counsel in defining key valuation and financial issues in the context of an overall legal strategy.
Corporate Advisory
The successful purchase, sale or restructuring of a company requires that the client's goals and objectives be clearly understood and matched to the possible strategies available under the circumstances. In achieving maximum value realization, Murray Devine assists clients by carefully considering all aspects of a particular situation, including historical and prospective financial information, the valuation of comparable companies and transactions and the competitive and strategic advantages of the subject company. In addition, we understand that confidentiality, managerial compatibility and the personal objectives of our client are of the utmost importance in structuring and implementing a successful transaction or restructuring.
Murray Devine is able to provide valuation advisory services in a variety of reorganization and bankruptcy contexts including out-of-court restructuring and pre-bankruptcy planning, valuation support for unsecured creditors committees and other bankruptcy constituencies, liquidation analyses for chapter 11 plan confirmations, NOL limitation analyses and post-confirmation fresh start accounting.
Fiduciary Advisory Services
Murray Devine's valuation services are frequently used by ESOP trustees and other independent fiduciaries to provide third-party support for their actions. Because of the depth of our experience in valuing all types of securities, we are well qualified to provide valuations and fairness opinions that assist such fiduciaries in the negotiation and approval of transfers of employer securities held by ESOPs and other types of transactions in which a fiduciary is required to make judgments based on the value of assets under its care.
Litigation Support
Murray Devine provides litigation support and expert witness services in a variety of contexts including dissenting shareholder lawsuits, economic damage assessments, fraudulent conveyance claims, buy-sell agreement disputes and other valuation-related situations. Murray Devine's senior staff includes CPAs, MBAs and attorneys who are able to assist our clients and their counsel in defining key valuation and financial issues in the context of an overall legal strategy.
Corporate Advisory
The successful purchase, sale or restructuring of a company requires that the client's goals and objectives be clearly understood and matched to the possible strategies available under the circumstances. In achieving maximum value realization, Murray Devine assists clients by carefully considering all aspects of a particular situation, including historical and prospective financial information, the valuation of comparable companies and transactions and the competitive and strategic advantages of the subject company. In addition, we understand that confidentiality, managerial compatibility and the personal objectives of our client are of the utmost importance in structuring and implementing a successful transaction or restructuring.
