Fiduciaries call upon us to independently analyze the fairness of corporate transactions such as business sales, mergers and acquisitions, roll-ups, leveraged buy-outs, divestitures, and corporate restructurings. Our offices have issued independent fairness opinions for a wide variety of stakeholders, including public stockholders, common and preferred stockholders in private companies, limited partners, warrant and option holders, employee stock ownership plans (ESOPs) and charitable foundations.
In all of its corporate transaction opinion work, we take a proactive approach that includes thoroughly scrutinizing the deal structure, transaction agreements, sources and uses of funds, financial projections, and value of consideration. We add value by identifying critical issues early in its process and proposing solutions that optimize the parties’ investment objectives. Great care is taken to properly document the due diligence and supporting analysis so that the opinion can withstand regulatory and adversarial challenges.
SingerLewak is also independent and therefore free of the conflicts of interest (most notably success fees) that can compromise the provider’s credibility.
An affirmative determination of post-transaction solvency involves a set of analyses that are unique to this type of opinion. There are but a handful of firms that have significant expertise in the nuances of solvency. Our Managing Directors are among the most experienced solvency opinion providers in the country, having been involved in their issuance in high profile transactions since the mid-1980’s.
Prior to issuing a solvency opinion, we perform a comprehensive assessment of the company’s ability to satisfy the specific tests of post-transaction solvency. This includes a valuation of assets and liabilities, a thorough review of the debt terms, a modeling of the company’s ability to generate sufficient cash flows to meet its debt obligations under potentially adverse business conditions, and an assessment of the adequacy of the company’s post-transaction capital. Our solvency opinions provide boards of directors, senior lenders and selling shareholders comfort that their transaction can withstand a fraudulent conveyance claim.
TAX AND ESTATE PLANNING OPINIONS
We have performed thousands of valuations for income and transfer tax purposes, including estate taxes, estate and gift tax planning, charitable contributions, buy/sell agreements, issuance of stock options, Subchapter S conversions, and other taxable transactions. These valuations have involved operating companies in virtually all industries, fractional interests in real estate holding companies, investment companies, derivative securities, and intellectual property rights of all types.
We have worked with many of the largest estates in America to achieve their estate planning goals. In so doing, it has developed a national reputation for its work with large, high profile estates, often involving multiple entities, tiered ownership, and complex contractual rights. This reputation is the result of insightful analysis, proprietary studies, and extreme care taken to properly document the analysis behind its opinions. Consequently, We have had overwhelming success in supporting its opinions upon challenge by the Internal Revenue Service.
IRC 409A OPINIONS
In 2005, the IRS issued proposed regulations under IRC Section 409(A) that, for tax purposes, regulates the treatment of “nonqualified deferred compensation” including the issuance of compensatory stock options. The proposed regulations shifted the burden of proof to the IRS to demonstrate that the option exercise price is below the fair market value of the common stock when a company obtains an independent appraisal.
Immediately after publication of the proposed regulations, we worked with the leading employee benefits attorneys and advisors to educate companies and their equity sponsors about the implications of the proposed regulations. This led to the establishment of SingerLewak as one of the preeminent appraisal firms in this rapidly emerging area of valuation.
Since 2005, SingerLewak has performed over 500 common stock valuations to establish the fair market value of common stock in connection with the issuance of compensatory stock options. Such valuations are also accepted by all major audit firms for fair value financial reporting purposes under FASB ASC 718 and 505-50.
Our 409(A)/fair value analyses have been thoroughly reviewed by the Big Four accounting firms, and have complied with each accounting firms’ audit testing regimen.
FINANCIAL REPORTING / FAIR VALUE OPINIONS
When company auditors require independent valuation opinions to complete a company’s audit, the company will generally comply by searching for and retaining a valuation firm. SingerLewak provides independent valuation services for financial reporting according to GAAP rules and in accordance with the Financial Accounting Standards Board Accounting Standards Codification.
Our breadth of valuation experience and expertise provides our clients with the support they need to satisfy GAAP and auditor requirements. Our clients benefit from our experience that includes working both inside as part of the valuation practice of audit firms and outside as independent valuation experts working for clients with their audit firms. Our prior experience providing valuation services within Big 4 and Next 4 accounting firms gives us a unique understanding of the audit review process. We have reviewed hundreds of valuation reports for audit firm clients, and understand what it takes to pass audit review.
Our financial reporting clients use our services year after year for audit and valuation compliance. We have repeatedly passed audit review by their clients’ audit and valuation teams, reducing the time and stress of the valuation portion of the audit. And as always, with SingerLewak, you will have a Managing Director with specific experience in valuation services for financial reporting working directly on your valuation throughout the project. We make your GAAP valuation compliance easier so you can focus on managing your business.
EMPLOYEE STOCK OPTION PLAN OPINIONS
A company’s most valuable assets are often the value of its intellectual property rights. We have extensive experience in valuing all manner of intellectual property, including many highly recognizable brands and trademarks, patent portfolios, software rights, film libraries, music publishing and recording catalogs, and book publishing rights. These assets are valued for sale, equity investment, tax and estate purposes, loan collateral, litigation support and purchase price allocation.
We understand that intellectual property assets are inherently unique, often involve complex legal rights and rarely trade in arm’s length transactions. These challenges necessitate extensive due diligence and innovative application of standard valuation metrics.
BANKRUPTCY AND FINANCIAL RESTRUCTURING
Effective financial restructuring of troubled companies is a multifaceted process that requires advice from professionals with expertise in the valuation of companies and complex securities; fraudulent conveyance issues; solvency and cash flow analyses; business planning; the financial elements of bankruptcy, tax and securities law; and financial accounting issues. We can fulfill a variety of roles when assisting the participants in troubled situations. SingerLewak may be retained by a company in a distressed pre-bankruptcy condition to provide valuation analyses in support of workout proposals or by a debtor in possession (or Chapter 11 trustee) to address the financial/valuation issues necessary to receive confirmation of its plan of reorganization. In addition, SingerLewak may represent the creditor or equity committee as financial advisor on various issues in a troubled situation.
We are committed to working as a team with clients and their legal counsel and is accustomed to the evaluation of complex, highly leveraged situations. Typical situations involving specialized financial and valuation services in the context of a bankruptcy, corporate reorganization or out-of-court workout include Non-Plan Chapter 11 Issues and Plan Issues in Chapter 11
VALUE OF INTELLECTUAL PROPERTY RIGHTS
We provide early stage company valuation advisory services to early stage technology and life sciences companies, as well as to potential equity sponsors of such companies. Industry experience includes: software, Internet, computer hardware, networking, telecommunications, electronics, medical device, pharmaceutical and biotechnology. In addition to valuation and fairness opinions, We advise clients regarding pricing, security and transaction structure, business plan assessment and performs due diligence reviews.
Since early stage companies generally lack meaningful and sustainable earnings and cash flow, their valuation proves inherently more difficult than that of mature companies. To address this, We utilize proprietary studies and innovative methodologies to value early stage companies.
EARLY STAGE COMPANY VALUATION
We provide early stage company valuation advisory services to early stage technology and life sciences companies, as well as to potential equity sponsors of such companies. Industry experience includes: software, Internet, computer hardware, networking, telecommunications, electronics, medical device, pharmaceutical and biotechnology. In addition to valuation and fairness opinions, SingerLewak advises clients regarding pricing, security and transaction structure, business plan assessment and performs due diligence reviews.
Since early stage companies generally lack meaningful and sustainable earnings and cash flow, their valuation proves inherently more difficult than that of mature companies. To address this, SingerLewak utilizes proprietary studies and innovative methodologies to value early stage companies.
Litigation Support provides both valuation consulting and expert testimony to parties in various types of legal dispute, including shareholder and partner disputes, bankruptcy proceedings, marital dissolution, patent infringement, tax disputes, and other civil litigation. Whether called upon to opine as to the value of a particular business interest or to quantify economic damages, SingerLewak’s keen understanding of the litigation environment and thorough preparation leads to defensible opinions.
While maintaining objectivity in its expert opinions, SingerLewak adds value by working with clients and their advisors on matters of strategy pertaining to valuation, preparation for presentation of conclusions, and cross examination of opposing experts.
Our substantial transaction experience and resulting knowledge of how companies are valued in the “real world” lends a level of credibility to its expert opinions that most litigation specialists cannot claim.