We were retained by an energy production company whose subsidiary acquired distressed energy assets from an energy & production company. In selecting a valuation methodology, we needed to consider the significant divergence in the enterprise value of the business versus the un-discounted value of the assets given the dramatic drop in commodity prices at the time.
Changes in corporate structure or ownership, a bankruptcy or a recapitalization can trigger the need for a valuation
Identifying, measuring and applying the adjustment for EO can be a complex and iterative process.
This may signal a coming potential increase in bankruptcy filings.
A leading international producer of nitrogen products acquires a nitrogen manufacturing company requiring a valuation for allocation of purchase price according to ASC 805.
A key tax consideration is whether the acquirer will be entitled to a stepped up tax basis in the assets and thus entitled to future tax deductions.
Determining the degree of insolvency is a key step since this will dictate the amount of COD income which may be excluded.