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Valuations are used for many reasons including mergers and acquisitions, financial and tax reporting, cash flow enhancement, bankruptcy and restructuring, litigation, insurance placement, and many other business and legal purposes. When measuring value in today's environment, businesses must also focus not only on their own values, but also on the values of key suppliers, distributors, and customers. New challenges, such as increasing complexity, changing financial, regulatory and legal factors, growing volatility, and reduction in the reliability of observable market inputs, have surfaced and need to be addressed by all parties involved.
What Will You Say When They Ask What Happened?
Executives who want to understand their organizations' asset and security values should begin by asking the following questions:
- Is my current valuation firm responsive to my needs and keeping me up to date regarding changing financial reporting regulations?
- Have I considered a fairness or solvency opinion to provide further support for my M&A process or any transaction that could be scrutinized by a lender or shareholder?
- Does my company have an understanding of the financial viability of key suppliers, distributors, and customers?
- Have I implemented a program to improve cash flow and/or raise capital through the use of my company's intellectual property?
- Is my company's buildings and equipment insured for the proper values? Are we paying too much? Too little?
- How am I addressing any needs to value complex, illiquid securities?
- Are we collecting all the royalty and license fees we are due? How can I be sure?
- Am I prepared for the valuation requirements associated with emergence from bankruptcy?
- Should I use a valuation firm independent of my investment bank to provide a fairness or solvency opinion to avoid a perceived or actual. Conflict inerest?
- Do I have issues regarding valuations that are specific to investing or operating in China?
Who's Looking Out for You?
Marsh Risk Consulting's (MRC's) valuation professionals deliver a full suite of valuation services to corporations, private equity firms, hedge funds, and government entities worldwide across virtually every industry. Our professionals, many having come to MRC from the valuation practices of the Big Four accounting firms, include dedicated IP valuation, fixed asset valuation, corporate valuation, derivatives valuation, and real estate valuation specialists. Many of our experts hold professional designations including chartered financial analyst, certified appraiser, and certified public accountant.
The Valuation Services Practice combines the experience and credentials of the Big Four accounting firms with the independence and service of a boutique consulting company. Our dedicated valuation professionals, resident in the United States, Europe, and Asia, can quickly respond to any valuation needs worldwide.
Financial Reporting and Tax Compliance Valuations
Companies are required to provide valuations for various financial situations such as:
- Merger and acquisition activity, which requires a valuation of the intangible and tangible assets of an acquired company for U.S. and international financial reporting purposes pursuant to SFAS 141R and IFRS 3, respectively;
- Testing goodwill and other long-lived assets for impairment annually or more frequently if warranted pursuant to SFAS 142, SFAS 144, and IAS 36;
- Derivatives valuations pursuant to SFAS 123R, SFAS 133, SFAS 157, and IRC Section 409A; and
- Fresh start accounting analyses, which encompasses a valuation of the intangible and tangible assets of a company emerging from bankruptcy.
Intellectual Property Optimization
Organizations looking to improve cash flow and/or raise capital are increasingly turning to their most valuable yet underutilized asset„o their intellectual property (IP). MRC has in-depth expertise valuing IP assets globally, including patented technology, trade names and trademarks, software, copyrights, film and music libraries, amongst others. Furthermore, the global reach of the MMC companies provides a unique opportunity for companies worldwide to increase shareholder value and/or increase cash flow through the licensing or sale of IP. Our experts have the capability to identify acquirers and assist throughout the entire transaction process.
Insurance Placement Valuations
Accurate and supportable valuations assist with insurance coverage decisions. MRC's Valuation Services Practice supports organizations' efforts to provide accurate financial data for insurance coverage purposes, including:
- Replacement cost analysis of buildings, leasehold improvements, contents, machinery and equipment; and
- Pre-loss business interruption valuations and Anticipated Maximum Business Interruption Loss (AMBIL) calculations.
Supplier/Distributor Financial Viability
The downturn in the global economy has caused financial distress for many suppliers and distributors; companies must have a full understanding of the viability of key suppliers, distributors, and customers.
MRC offers a unique solution to assist in ascertaining the financial viability of suppliers, with a selection of options ranging from a high level screen of an unlimited number of suppliers to a full "solvency opinion."
Fairness and Solvency Opinions
Fairness and solvency opinions assist in the transaction decision-making process and also mitigate risk for management and boards of directors. MRC¡¦s valuation experts conduct analyses of complex financial transactions to provide stakeholders, such as boards of directors, with a complete understanding of the financial fairness of potential transactions, including divestitures, acquisitions, financing, debt exchanges, transfers of net operating losses, and repurchase of various share classes, amongst others.
Solvency opinions are provided to boards of directors, lenders, and others requiring an independent opinion or additional assurances in leveraged transactions, stock redemptions, debt exchanges, stock redemptions, and dividend distributions, amongst others.
Portfolio Valuations
MRC has in-depth experience valuing portfolio companies and investments of private equity firms, investment funds, etc. on a quarterly basis for financial reporting purposes pursuant to SFAS 157 as well as to meet lender requirements. Our expertise in simultaneously valuing a diverse array of companies is complemented by our in-depth experience valuing complex, illiquid derivatives.
Litigation Support
The professionals at MRC have extensive experience providing valuations for litigation support and can provide fact-based testimony in support of those valuations. MRC valuation professionals have given fact-based testimony in a wide variety of judicial venues as well as geographies.
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
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