Whether related to deals, impairment testing or tax, there is significantly increased focus placed on inputs in a valuation. As an important part of due diligence, auditors must question management forecasts and parse the model line-by-line. This scrutiny extends to valuations in the form of discount rates, long-term growth rates, attrition rates and royalty rates.
Auditor expectations and resulting auditor inquiries have greatly increased with scrutiny placed on the audit firms themselves from the PCAOB. VRC understands that auditors must understand the rationale for value conclusions, as well as see the inputs with proper support and thought given to the future operational impact and to future accounting needs, including testing for impairment. In the end, all parties want to avoid financial restatements and will push to ensure values are reasonably stated with strong support for the inputs used to derive them.
Given the complexity of many valuation assignments, communication between a company’s audit team and its outside valuation experts is critical. VRC believes the best practice for navigating the needs of a company’s management team and the related audit and regulatory scrutiny is to get the deal values correct quickly, using the right methods and processes that will stand the test of time. A valuation partner who understands the functional role of the audit team and can work effectively with the diverging valuation perspectives can bridge solutions that meet auditor requirements and objectives.
Corporate tax professionals are tasked with establishing tax-efficient corporate structures that meet business goals while protecting and maintaining flexibility in cash and other corporate assets. In contrast to the corporate tax professionals, there is a worldwide, federal and state and local focus by the government and various taxing jurisdictions on creating rules and legislation in an attempt to find new and innovative ways to raise tax revenues.
The result? Tax groups have had to significantly expand their role and must now seek closer alignment and partnership with valuation professionals. This partnership allows them to better understand the value implications of various transactions, whether internal or external, and get ahead of any unanticipated surprises, while at the same time minimizing risk and tax exposure.
Given this scrutiny, looking at entity values from an operating perspective and bridging to tax or book perspectives provides a supportable and transparent valuation analysis. VRC’s valuation experts are viewed as a key partner to the tax group as they contemplate various transactions and also help them stay on top of current rules, regulations and best practices.
Audit & Tax Professionals Services
Valuations for complex instruments such as options, warrants, convertible bonds, contingent consideration, preferred & common stock
Financial Reporting Valuations
Valuations to make confident decisions & support evolving financial reporting standards
U.S. domestic & global tax laws require valuation experts who understand the intricacies of tax reporting
Mergers & Acquisitions
ASC 805 & ASC 350 make it critical for buyers & sellers to consider how a transaction impacts financial reporting
Valuations for all types of hard-to-value illiquid or non-marketable securities including level 3 securities, loans, bonds, equity & structured products