FINANCIAL REPORTING

A portfolio valuation typically involves a valuation advisor performing an independent valuation of specific investments. It is best practice to engage a third-party valuation expert if a private equity firm (or other investment management firm) does not have appropriate resources and expertise to perform valuations of complex and/or illiquid investments that are objective and independent. To ensure an unbiased analysis and independent valuation, private equity firms often make use of third-party valuation firms to perform this analysis.

Please contact us if you have any questions about portfolio valuations or want to get started.

When a company is acquired, FASB ASC 805, Business Combinations, may require the acquiring entity to allocate the purchase price to the individual assets and liabilities as part of purchase accounting. Third-party valuation experts are often engaged to recommend the fair value of acquired tangible and intangible assets to assist management with these purchase accounting requirements.

Please contact us if you have any questions about purchase price allocations or want to get started.

When goodwill is recognized during a business combination, FASB ASC 350, Intangibles – Goodwill & Other requires goodwill to be tested for impairment at least annually. However, more frequent testing is required when events occur that may indicate it is more likely than not that impairment exists.

In the event an impairment analysis is required, we can assist with valuations of goodwill, indefinite-lived intangibles, and long-lived assets for impairment testing purposes pursuant to ASC 350, Intangibles – Goodwill & Other and ASC 360 -10, Impairment or Disposal of Long-lived Assets.

Please contact us if you have any questions about goodwill impairment or want to get started.

FASB ASC 718, Stock Compensation, requires that share-based compensation (i.e., equity, options, or restricted stock) be accounted for at fair value. Certain valuation measurements may be required upon grant and/or modification. Intrinsic professionals are experts in the complex valuation techniques which comprise these types of valuations.

Please contact us if you have any questions about equity compensation or want to get started.

Financial reporting requirements may require companies to value various complex debt and equity securities (e.g., contingent consideration, preferred & common stock, equity derivatives, debt instruments, and other structured products). Intrinsic professionals are well-versed in the generally accepted valuation methodologies commonly used to value these complex securities.

Please contact us if you have any questions about complex securities or want to get started.

409A (“409A”) is a tax provision of the Internal Revenue Code. If the series of rules detailed under 409A are not followed, employees who have been issued stock options could be subject to punitive tax consequences. However, an exclusion to the tax consequences is allowed if an option is issued with an exercise price that is at least equal to the fair market value of the underlying stock on the date of grant.

Further, the regulations under 409A provide a safe harbor that allows a company to rely on a valuation from an independent, third-party firm that specializes in valuations for 409A and follows consistent valuation methodologies. If the current fair market value is challenged, the burden of proof shifts to the IRS to demonstrate that the fair market value at the time of option issuance was “unreasonable.” Therefore, a 409A valuation is used to set the strike price of equity options issued to employees at the current fair market value of the stock.

Intrinsic can help you navigate the valuation process and provide you with a comprehensive analysis to assist in issuing employee stock options or restricted stock. Retaining a qualified and independent valuation firm helps ensure the 409A valuation work is defensible and the safe harbor applies.

Please contact us if you have any questions about stock compensation or or want to get started.