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Intangible Assets, Earn-Outs in BioPharma Acquisitions

Max Fonarev December 7, 2016

Sorbus Advisors LLC studied purchase price allocations in biopharmaceutical industry titled “Valuation of Goodwill and Intangibles in 2015 BioPharmaceutical Transactions.” The study focused on recognition, valuation, and determination of useful lives of pertinent intangible assets, contingent considerations and goodwill. While no two acquisitions are the same, common themes in the valuation of intangibles and goodwill

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Optionees, Stop Asking for Less

Max Fonarev December 7, 2016

An employee stands to receive bigger payout when his/her stock options have a lower exercise price, i.e. stock options are cheap. At the same time, a lower exercise price may signal lower value of the option itself. On the grant date, the stock option recipient should focus on value, and not the amount of potential payout.

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Stock Options vs. Markets In Relative Total Shareholder Return Awards

Max Fonarev September 6, 2016

This article was written in collaboration with James Lecher, CEP with 718 Valuations LLC. Relative Total Shareholder Return (“TSR”) Awards are very popular, utilized by over 49% of S&P 500 companies in 2014. These plans are attractive because they align total compensation with the company’s stock price performance relative to that of its peers. Under Relative

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Is Your Financial Forecast Ready?

Max Fonarev May 23, 2016

The financial forecast is the basis for most valuation engagements. Through the magic of valuation science, management’s outlook is combined with financial-market-derived discount rates to produce a reasonably accurate valuation. The effectiveness of this approach is demonstrated by the countless transactions that have been priced using the same methods. In financial reporting, the army of

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5 Overlooked Elements in Purchase Accounting Valuation

Max Fonarev February 23, 2016

Purchase accounting follows every M&A transaction. It typically requires a valuation analysis that covers acquired intangible assets, earn-outs, and other elements of the transaction. While relegated to the post-transaction activities, these valuations offer substantial amount of information that can assist management in making important strategic decisions. Below are 5 reasons to take a closer look

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The Intuition Behind Economic Rate of Return?

Max Fonarev December 7, 2015

Economic rate of return is a key concept in financial management and valuations. It is a single measure that represents all of the following: i) the discount rate used in present value calculation ii) the expected rate of return iii) opportunity cost. For example, a business opportunity may have a 20% expected rate of return.

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