Articles & Insights
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Make no mistake about it, market uncertainty associated with Trade Wars creates risk, and perceived risk reduces valuations. In a nutshell, this is exactly what we see playing out in the recent stock market turmoil and it’s not isolated to just publicly traded stocks, it is also being felt by private companies from start-ups to merger and acquisition activity, wherever equity transactions are occurring.
Many analysts see a rebound in M&A transaction activity in the second half of this year as interest rates prospectively begin to ease. Accordingly, the prospects for short-term improvements in macroeconomic conditions are causing many prospective sellers to wait for lower interest rates in the belief that valuations will increase.
The traditional Income Statement Approach classifies costs according to the reason costs were incurred and yields a Profit Calculation for your business as a whole. While this is a good measure for understanding the profitability of your entire business, it is not an effective method for measuring the contribution that individual products make to your company’s bottom line. For this, you need to utilize a Contribution Margin Approach.
A Fairness Opinion can provide important information in a wide variety of financial transactions such as mergers, acquisitions and business privatizations, as well as hostile takeovers and distressed sales. Very succinctly, a Fairness Opinion can be thought of as a second opinion because it addresses the fairness of a proposed equity transaction from a financial perspective, as produced by an independent financial advisor who objectively examines the price, terms and consideration to be received in a given transaction.
