Stakeholder Alignment

By: PJ Patel

GETTING TO THE RIGHT VALUES FOR STAKEHOLDERS THAT WILL WITHSTAND SCRUTINY, STAND THE TEST OF TIME AND EFFECTIVELY REPRESENT THE ACQUISITION RATIONALE FAR BEYOND THE MODEL.

[Transcription]

I always say value is at the center of all business transactions. Not only do we understand valuation, but we understand accounting as it relates to valuation. We understand tax as it relates to valuation. We can really balance all of those issues and come up with a conclusion that makes sense to each of those parties.

When you do an M&A transaction, there is a number of different stakeholders. Within the company, there is the corporate development group that is charged with doing the deal and fulfilling the company’s strategy; there is the book side that is responsible for reporting the deal, and the tax side that is reporting the tax side of the deal. There are a lot of stakeholders internally. Externally, you also have the SEC, the PCAOB, the company’s auditors – all who have some stake in the values that are derived.

It is important to come up with values that stand up to the test of time because not all the scrutiny will be on day one. It may be a year from now. It may be two years from now.

Whether it is the original deal price, accounting related issues, or tax-related issues, you really have to have all of those parties on the same page, speaking the same language and communicating. Valuation is at the center of that.