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Taylor Consulting Group prides itself on remaining current
on the newest developments in the area of financial valuations. Below we
have identified examples of some current issues that clients and our professionals are having to address. If you are interested
in learning more about these and other topics, please feel free to contact
us.
Analysis of Strategic Agreements
Businesses have an ongoing need to manage business risk by effectively monitoring and controlling their numerous agreements (e.g., strategic partnerships, alliances) and the underlying provisions. To assist clients with this complex, continuous process, TCG offers consulting services that help clients understand the risks of strategic agreements and the impact these agreements (relationships) will have on their companies’ operating results.
“Cheap Stock” Issues
If a significant spread exists between the option prices granted to employees, officers, or directors of a company prior to a company's acquisition or Initial Public Offering (IPO) date and the ultimate acquisition or IPO share price, the SEC may argue that the option price was issued at less than fair market value. If this occurs, the issuer must incur an accounting expense for the difference between the fair market value of the option on the grant date and the acquisition or IPO price. This expense lowers the issuer's earnings per share and is referred to as a "cheap stock" issue. TCG can provide valuation expertise, documentation, and support for the fair market value of these options, ultimately strengthening the issuer's position with the regulatory authorities.
Private Equity Investment in Clients
The SEC has been scrutinizing the growing practice of offering cheap-stock or other investment opportunities to corporate customers who place orders for their products. The Emerging Issues Task Force (EITF) is analyzing this issue for the SEC as it relates to the fair market value of the investment and its impact on the investor's financial statements. Specifically, if the fair market value of the investment is lower than the price paid by the investor, the investor's revenues could be overstated and certain adjustments would be required. TCG has experience in the valuation of these types of investments, as well as other investment instruments like convertible preferred stock, convertible debt instruments, and warrants. TCG understands the EITF's concerns surrounding these investments and can provide the independent perspective and documentation to strengthen an investor's position with regulatory authorities.
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