By M&A Source
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The podcast currently has 32 episodes available.
The discussion began with an introduction to US GAAP (Generally Accepted Accounting Principles) and its significance for companies looking to expand into the US market. Katrina Nachi, a cross-border accounting advisor, highlighted that companies often face challenges when entering the US market due to differences in accounting standards and regulations. Understanding and complying with US GAAP is crucial for companies seeking US investors, acquiring US companies, or planning an IPO in the US.
Katrina explained the key differences between US GAAP, UK GAAP, and IFRS (International Financial Reporting Standards). While IFRS and US GAAP are becoming more aligned, there are still nuances, particularly in areas such as revenue recognition, capitalization of costs, and share-based compensation. UK GAAP, on the other hand, has more significant differences from US GAAP, especially in terms of what can be capitalized.
Katrina outlined a three-phase process for converting from UK GAAP to US GAAP:
1. Qualitative assessment: Identifying differences in accounting policies and creating a matrix comparing current policies under UK GAAP with suggested US GAAP policies.
2. Quantitative assessment: Adjusting calculations and schedules to reflect US GAAP requirements and quantifying conversion adjustments.
3. Financial statement preparation: Preparing financial statements and footnote disclosures under US GAAP, incorporating conversion adjustments.
The discussion covered the additional compliance requirements and auditing considerations when adopting US GAAP. Companies may need to undergo a US GAAP audit, which typically involves a lower materiality threshold and more thorough walkthroughs and control testing. The timing of audits and potential overlap with local audits were also discussed.
Katrina emphasized the importance of being proactive in preparing for fundraising rounds with US investors. Presenting a qualitative assessment of US GAAP differences and potential conversion adjustments can demonstrate an understanding of the requirements and facilitate due diligence processes. This can potentially broaden the range of investors available to the company.
Several challenges and common issues were discussed, including:
- Lack of documentation and messy calculations under current GAAP, making the conversion process more difficult.
- Determining the appropriate retrospective period for conversion, which may depend on the intended use of the financial statements.
- Ensuring knowledge transfer and ongoing support for the local finance team to maintain US GAAP reporting after the conversion.
Katrina highlighted the importance of effective knowledge transfer and ongoing support for the local finance team. She suggested exploring options such as working with a fractional Chief Accounting Officer or leveraging external advisors for specific transactions or new accounting standards. This approach can provide access to US GAAP expertise while enabling the local team to maintain day-to-day reporting.
For companies considering US expansion or fundraising with US investors:
For companies undergoing a US GAAP conversion:
For companies operating in regulated industries (e.g., fintech):
Problem: Lack of understanding and documentation of current accounting policies under local GAAP, making the conversion process more challenging.
Solution: Proactively document and maintain clear accounting policies and procedures under local GAAP. This will facilitate the conversion process and enable effective knowledge transfer to the US GAAP advisor.
Problem: Limited budgets for engaging large accounting firms to handle the US GAAP conversion, leading to potential knowledge gaps within the local finance team.
Solution: Explore alternative engagement models with US GAAP advisors, such as working collaboratively on specific phases of the conversion process or leveraging fractional Chief Accounting Officer services. This can provide access to expertise while enabling knowledge transfer and cost savings.
Problem: Difficulty finding local finance professionals with strong US GAAP expertise, particularly in Europe.
Solution: Maintain a strong local finance team with expertise in local GAAP and leverage external US GAAP advisors for specific transactions, new accounting standards, or ongoing support. This hybrid approach combines local knowledge with specialized US GAAP expertise.
Problem: Potential overlap or conflicts between local audits and US GAAP audits, leading to inefficiencies and duplication of efforts.
Solution: Engage with auditors early to align timelines and coordinate the local and US GAAP audit processes. Explore opportunities for auditors to leverage work already performed during the local audit to streamline the US GAAP audit process.
built for European finance teams: https://www.theinternationalaccountant.com/
Show notes: https://podcast.mesource.org
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In this episode of the M&A Source podcast, Dave Dejewski dives deep into essential business performance metrics that significantly impact business valuation and success. Dave discusses key metrics such as EBITDA, employee activity ratios, and cash flow ratios, providing insights into their importance and how to leverage them for better client guidance. He shares practical examples from client experiences and offers a comprehensive worksheet of various metrics for M&A professionals.
The episode discusses the importance of understanding and analyzing key business performance metrics in the M&A process, emphasizing on metrics like sales per employee, employee turnover rate, and operating cash flow, and offers a comprehensive worksheet with various valuation ratios and metrics to better guide clients and position oneself as an expert.
David emphasizes the value of presenting oneself as an expert by having in-depth knowledge of these metrics and being able to have meaningful conversations with sellers and buyers. By analyzing these metrics, M&A advisors can drive improvements, increase the value of the businesses they represent, and remove friction from the transaction process.
The offer of a worksheet with 56 different valuation ratios, sector-specific ratios, profitability ratios, operational metrics, and more is a valuable resource for M&A professionals to incorporate into their practice and better serve our clients.
Visit us at https://podcast.masource.org
In this episode, Shelia Darby, Managing Director of Bizworth, discusses the importance of accurate business valuations in M&A transactions, the different valuation methodologies, challenges in valuations, best practices and ethical considerations, and the value of partnering with valuation professionals.
This episode features an interview with Shelia Darby, Managing Director of Bizworth, who has over 25 years of experience in business valuations. The discussion covers the following key sections:
Introduction and Background
Shelia shares her background, starting in the corporate world at companies like Enron and transitioning to the middle market and Main Street valuations. She discusses her certifications and the importance of continuous learning.
Importance of Accurate Business Valuations
Shelia explains why accurate business valuations are critical for both buyers and sellers in M&A transactions, helping to close more deals and avoid leaving money on the table.
Valuation Methodologies
The three main valuation approaches are discussed: asset approach, market approach, and income approach. Shelia dives into the details of each approach, common methods used, and when to apply them.
Special Circumstances and Challenges
Various special circumstances and challenges in business valuations are explored, including non-operating assets, intangible assets, regulatory impacts, distressed businesses, and rapid growth or volatile businesses.
Best Practices and Ethical Considerations
Shelia shares best practices for valuations, emphasizing transparency, honesty, and using reputable sources. She also discusses ethical considerations, drawing from her experience on the Ethics Oversight Board of NACVA.
About Bizworth
Shelia provides information about her company, Bizworth, and the valuation services they offer to support M&A advisors and business brokers.
Throughout the interview, several questions were asked and answered:
Q: How did you get into the business of valuations, and what drew you to it as a career?
A: Shelia started in the corporate world at companies like Enron, working in valuation groups. She transitioned to Main Street and middle market valuations in 2014, finding it more appealing.
Q: Why is an accurate business valuation critical for both the seller and the buyer in the M&A process?
A: Accurate valuations help close more deals, avoid leaving money on the table, and identify gaps early on.
Q: What are the different valuation methodologies, and what should M&A advisors consider when looking at them?
A: The three main approaches are asset, market, and income. Sheila explains each approach, common methods, and when to use them.
Q: What are some common challenges you come across when valuing businesses, particularly in the small and medium enterprise area?
A: Common challenges include non-operating assets, intangible assets, regulatory impacts, distressed businesses, and rapid growth or volatile businesses.
Q: What are your thoughts on best practices and ethical considerations in valuations?
A: Best practices include transparency, honesty, and using reputable sources. Ethical considerations involve operating with integrity, avoiding conflicts of interest, and staying in your lane.
Here are five valuable quotes from the interview:
"If you don't get a proper accurate valuation, you're leaving money on the table. First of all, you're not closing as many deals as you can, right you're not identifying as early on as possible if there's gaps."
"Honesty is the best policy. Transparency is crucial. It doesn't matter if you're an M&A advisor, an attorney supporting an M&A advisor, CPA, or evaluation professional honesty is the best policy transparency.”
"Make sure you're not making things up you're not feeling your way through everything it's one thing to have an intuitive gut. We all want to listen to our gut, but back it up with facts."
Shelia Darby, on best practices
"If you're going to spend a lifetime building up your reputation, don't lose it in 5 minutes that's that's the standard there, that you're going to have a long plus, very plus, you know, very you have lots of prosperity in your field if you just abide by those."
"It's OK to say you have a valuation professional supporting you. You don't have to be your clients valuation professional and CPA and attorney stay in your lane and be the best conductor to get their business sold."
This interview with Shelia Darby provided valuable insights and lessons on business valuations, including:
In summary, this interview highlights the complexity and nuances involved in business valuations, emphasizing the need for M&A advisors to have a solid understanding of valuation principles while also recognizing the importance of collaborating with valuation experts to ensure accurate and defensible valuations.
In this tax-season special episode of the M&A Source Podcast, we delve into the fascinating world of taxes within the mergers and acquisitions space. Our guest, Roman Basi, a seasoned attorney, CPA, and real estate broker, shares invaluable insights into the complexities of taxes affecting M&A transactions. From capital gains adjustments to international tax policies, Roman's expertise sheds light on the myriad ways taxes influence the outcome of business deals.
Roman's journey, from his early days working in his father's real estate company to becoming a leading expert in financial, legal, and tax planning, provides listeners with a unique perspective on the importance of tax knowledge in the M&A industry. His contributions to education and his role as president of the Center for Financial, Legal and Tax Planning underscore the critical intersection of law, accounting, and real estate in successful business transactions.
This episode is a must-listen for M&A advisors, business owners, and anyone interested in the behind-the-scenes tax implications of business mergers and acquisitions. Roman's practical advice and personal anecdotes offer a compelling narrative that demystifies taxes, making them an engaging topic for all.
Key Takeaways:
In this short community update, hear from Kathlene Thiel, our 2024 Conference Chair as she explains our agenda and what you can expect from this Spring conference.
Visit the show notes at https://podcast.masource.org
Visit M&A Source at https://masource.org
In today's episode of the M&A Source Podcast, we discuss the myriad benefits that M&A Source offers to its members with Russell Cohen, an M&A advisor and board member for M&A Source. Russel is also the chairman for the membership benefits committee.
Russell and David cover a wide range of topics, from exclusive discounts on essential services like insurance and data room solutions to access to valuable tools that are crucial for any successful M&A advisor. Russell shares his personal experiences and success stories, highlighting how these benefits have positively impacted his professional journey.
We also touch on the importance of the M and A Source community in fostering connections and sharing knowledge within the M&A world.
Whether you're an experienced advisor or just starting, this episode is a treasure trove of information on how being a part of M&A Source can elevate your practice in the competitive world of mergers and acquisitions.
Resources Mentioned in the Show:
Welcome to our latest episode of the M&A Source Podcast. In this episode, we dive deep into the world of Purchase Agreements with our esteemed guest, Matt Bowles, an attorney at Hogan Lovells. Here's what you'll discover in this insightful discussion:
Join us in this enlightening conversation and enhance your understanding of the critical role of purchase agreements in M&A transactions. Whether you're a business owner, intermediary, or legal professional, this episode offers valuable insights for all.
Additional Resources:
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In this episode of the M&A Source Podcast, host Dave Dejewski is joined by Ryan Hurst, an expert in financial consulting, to discuss the complexities and significance of working capital in mergers and acquisitions.
Key Highlights:
Ryan Hurst's Background: Ryan shares his journey from growing up in a family-owned business to his current role in financial consulting, focusing on helping business owners broaden their perspectives on their companies' potential.
Understanding Working Capital: The episode delves into the multifaceted nature of working capital in M&A transactions. Ryan explains the varying interpretations across different sectors like accounting, valuation, and transaction advisory.
Real-World Scenarios: Ryan provides three compelling case studies, each highlighting different aspects and challenges of working capital in M&A:
Advice for M&A Intermediaries: The importance of early preparation, understanding working capital, building trust, and staying informed about industry trends is emphasized.
Connecting with Ryan Hurst: Listeners interested in Ryan’s expertise can reach him through RKL’s website, LinkedIn, or his email. See his bio and contact info here.
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*This podcast is brought to you by M&A Source, a nonprofit organization dedicated to the professional development of mergers and acquisitions intermediaries. For more information, visit [M&A Source](www.masource.org).*
Scott Mashuda, a founding Partner of River’s Edge Alliance Group and M&A Source’s Chairman-elect, discusses his background and what he’s excited about for M&A Source in 2023.
Rich Jones (Zabel Companies) and Bob McCormack (Murphy McCormack Capital Advisors) Discuss Building Trust between Entrepreneurs and Equity Partners
The podcast currently has 32 episodes available.
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