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Willamette Management Associates analysts perform complex valuations of businesses, business ownership interests, debt and equity securities, intangible assets and intellectual properties, and special purpose properties. We routinely perform these complex valuations for the following purposes:
Bankruptcy and
Reorganization
We perform valuations of the secured creditors'
collateral interest in debtor assets, of
Section 363 property sales, of
debtor-in-possession (DIP) financing
transactions, and of
other DIP proposed transactions. We perform
solvency and insolvency analyses of debtor
corporations. We review the reasonableness of
proposed plans of reorganization. And, we
perform fresh-start accounting valuations for
debtors emerging from bankruptcy
protection
Bankruptcy Testifying Expert Services
Willamette Management Associates was engaged by the proponents of a reorganization plan to prepare a declaration in the matter of In re Plant Insulation Company (No. 09-31347, U.S. Bankruptcy Court, N.D. Cal. 2014). Our assignment was to review the declarations of the opposing experts in this case and to offer our opinion on certain shareholder agreements related to the matter. In particular, we were asked to review a right of first offer agreement and to opine on its impact on the control, transfer, and value of common stock and warrant interests in Bayside Insulation and Construction, Inc. Following a trial, at which Willamette managing director Curtis Kimball offered rebuttal expert testimony, the U.S. Bankruptcy Court accepted the plan of reorganization proposed by the Futures Representative of the Official Committee of Creditors.
We were retained by legal counsel for the secured creditors' committee. Our assignment was to estimate the fair market value of the total equity of an oil pipeline company DIP. Based on both the discounted cash flow and the guideline publicly traded company valuation methods, we valued the DIP equity at a positive $50 million. This positive equity value supported the creditors' proposed plan of reorganization. We testified in U.S. Bankruptcy Court on behalf of the creditors' committee, and the case settled favorably before the conclusion of the trial.
In U.S. Bankruptcy Court, we testified for our client, the secured creditors' committee, as to the fair market value of a Florida residential real estate developer. One dispute in this bankruptcy involved the proposed plan of reorganization. Specifically, the dispute related to the value of the DIP business enterprise on a going-concern basis versus the value of the DIP business enterprise on an orderly liquidation basis.
ESOP Transactions and
ERISA Compliance
We provide valuation opinions and fairness
opinions to ESOP trusts that are buying
or selling sponsor company securities. We also
provide annual sponsor company fair market
valuations for ESOP administration and ERISA
and tax purposes.
A regional grocery store chain formed an employee stock ownership plan (ESOP). The ESOP purchased 100 percent of the employer company common stock from the founding family shareholders. We provided a fairness opinion to the ESOP institutional trustee, opining that the ESOP was not paying more than adequate consideration for the employer company stock.
Fair Value
Accounting and Financial Reporting
We perform fair value valuations of acquired
businesses, tangible and intangible assets,
and compensation-related securities. These
fair value valuations comply with GAAP
reporting standards related to purchase
accounting, impairment of goodwill or of
long-
lived
assets, or stock-based compensation.
We recently performed a purchase accounting allocation for a Fortune 500 defense contractor. We concluded the fair value of the acquired company's working capital, real estate, tangible personal property, identified intangible assets, and goodwill. We also concluded the fair value of the total purchase consideration, including an analysis of the contingent future earn-out payments.
We recently performed a long-lived asset impairment study (and the related asset fair value appraisal) for a Fortune 500 client in a capital-intensive manufacturing industry. This engagement included impairment analyses of tangible assets (e.g. manufacturing equipment and real estate) and of intangible assets (e.g., trademarks, patents, and licenses).
We recently valued executive/employee stock options for a substantial closely held corporation for fair value accounting purposes. We valued the compensation elements of all of the corporation options, warrants, grants, and rights. Using all allowable option pricing models, we estimated the fair value of the company's share-based compensation.
We recently performed the fresh-start accounting fair value analysis of a national retail chain. The client was emerging from bankruptcy, and the client needed to restate the reorganized company assets and liabilities at fair value.
Financing Securitization and
Collateralization
We value derivative securities that are
collateralized by debt instruments or other
assets. We value securities and income
producing property that serve as collateral
for a
secured financing or restructuring.
For a publicly traded energy company, we valued electric generation, distribution, and transmission facilities—both domestically and internationally. These facilities were used as collateral to secure public debt offerings.
For a major financial institution, we valued numerous industrial and commercial properties that were used as collateral for sale/leaseback transactions.
Forensic Analysis
and Expert Witness Testimony
Our forensic analysts quantify lost
profits and other economic damages related
to either
a breach of contract or a tort. Our
forensic analysts have testified in
federal, state,
and international courts with respect to
antitrust, shareholder disputes,
bankruptcy,
infringement, breach of contract,
interference with business opportunity,
family law,
securities fraud, and other commercial
litigation matters.
Transfer Pricing Testifying Expert Services
In the matter of Amazon.com, Inc. & Subsidiaries v. Commissioner (148 T.C. No. 8 (2017)), the U.S. Tax Court found in favor of the taxpayer plaintiff. The case involved a 2005 cost sharing arrangement that Amazon entered into with its Luxembourg subsidiary. Amazon granted its subsidiary the right to use certain pre-existing intangible property in Europe, including the intangible assets required to operate Amazon's European website business. The Tax Court held that (1) the Service's determination with respect to the buy-in payment was arbitrary, capricious, and unreasonable; (2) Amazon's CUT transfer price method (with some upward adjustments) was the best method to determine the requisite buy-in payment; (3) the Service abused its discretion in determining that 100% of technology and content costs constitute intangible development costs (IDCs); and (4) Amazon's cost-allocation method (with certain adjustments) was a reasonable basis for allocating costs to IDCs. Robert Reilly, a managing director of our firm, provided expert testimony on behalf of taxpayer Amazon in this Section 482 intercompany transfer pricing case.
We were retained by legal counsel representing the Pennzoil Corporation board of directors to provide an expert opinion and expert testimony with regard to the acquisition of Pennzoil by Shell Oil. A dissenting shareholders appraisal rights action was filed by several former Pennzoil shareholders. The plaintiffs claimed, among other allegations, that the Pennzoil board accepted a price below the fair value of the shares when it ratified the proposed transaction. The agreed upon price-$22 per share, or approximately $1.7 billion-produced a total Pennzoil acquisition value of approximately $3 billion. We concluded that the $22 per share price accepted by the Pennzoil board was a fair price, based on our independent fair value conclusion of $21.41 per share. The dissenters claimed that the fair price was $34.26 per share. After a three-week trial, the jury ruled in favor of the Pennzoil board of directors, agreeing with us that the transaction price was fair.
We were retained by legal counsel in a dissenting shareholder appraisal rights case on behalf of a company that operates a one-mile racetrack. The racetrack hosts two annual NASCAR Winston Cup Series races, along with other motor sports events. Our analyst provided expert testimony in state court as to the fair value of the subject company equity. The court accepted our fair value conclusion with no material adjustment.
Pacific Guardian Life Insurance Company was majority owned by a Japanese financial services institution. Through the implementation of a reverse stock split, the Japanese parent corporation cashed out all of the minority stockholders. Certain stockholders exercised their dissenting shareholder appraisal rights. We estimated the fair value of the Pacific Guardian stock in support of the parent company's cash out price. And, we provided expert testimony in state court in support of our fair value appraisal.
We were retained by the U.S. Department of Labor (DOL) to provide independent financial adviser services related to an ESOP sponsor company. An issue in the dispute related to the fair market value of the common stock of a printing equipment distributor employer corporation. Over the course of approximately 18 months, the sponsor company operations failed. During that period, the employer corporation made distributions to the key management/controlling shareholders. The ESOP owned approximately 40 percent of the outstanding employer stock. On audit, the DOL questioned (1) the amount of the management distributions and (2) the most recent employer stock valuation prepared prior to the discontinuation of the company operations. We advised the DOL in its negotiations leading to a successful settlement of the dispute.
Management
Information and Corporate Planning
We perform buy-sell agreement and other
ownership transition valuations. We
perform
complex business valuations for estate
planning purposes. We value spin-off and
other
cash flow generation opportunities. We
analyze expected synergistic benefits
and
recommend merger or acquisition price
bids.
For a nanotechnology IP development company, we identified various trade secrets and other intellectual property. We developed a plan for our client to transfer its IP to an off-shore subsidiary and to license back the IP for an arm's length price (ALP) royalty rate. In addition, we developed a plan to allow the client to outbound license the IP to several multinational businesses from its IP holding company subsidiary.
Not-for-Profit
Entity Transactions
Whenever a for-profit entity transacts
with a not-for-profit entity, the
respective
boards should be concerned with
private inurement or excess benefits
issues. Accordingly,
we perform fair market value
valuations of the transferred entity
(e.g., medical
practices, clinics, hospitals). We
also perform fair market value
valuations of services
contracts (e.g., office lease,
employment agreement, management
contract) between the for-
profit and the not-for-profit parties.
For not-for-profit hospital clients, we have opined on the fairness of the purchase price for purchases of medical practices, dialysis centers, urgent care centers, ambulatory surgery centers, diagnostic imaging facilities, and other health care businesses and practices. These fair market value valuations were intended to provide comfort to the hospitals with respect to excess benefits, private inurement, and other regulatory issues.
Sample Engagements +
We prepared a fairness opinion related to a not-for-profit university complex purchase of the assets and business structure of a for-profit college. This fair market value valuation was intended to provide comfort to the not-for-profit buyer's board of directors with respect to private inurement considerations.
Taxation Planning and Compliance
We perform valuations of close
corporations, fractional business
interests, restricted
public securities, and intellectual
property for gift tax, estate tax,
and income tax
purposes. We conclude the arm's-length price of tangible property,
intangible property, and services
for intercompany transfer
price purposes. And, we value
special purpose and income-producing
properties for ad
valorem property tax purposes.
Income Taxation Testifying Expert Services
On February 21, 2017, the U.S. Court of Federal Claims dismissed (with prejudice) the complaint filed by plaintiff Washington Mutual, Inc., against the United States (Nos. 08-321T, 08-211T). The taxpayer plaintiffs were seeking a refund of at least $149 million in certain federal taxes paid by H.F. Ahmanson & Co. ("Ahmanson") during several tax years in the 1990s, based upon the abandonment loss and amortization deductions available under the Internal Revenue Code. The case involved the fair market value determination of the regulatory right to open deposit-taking branches in certain states other than California ("branching rights"), the contractual approval right to treat the goodwill created by certain acquisitions as an asset for regulatory accounting purposes ("RAP rights"), and certain other intangible assets. Curtis Kimball, a managing director of our firm, critiqued the valuation report presented by the plaintiff's valuation expert and provided rebuttal expert testimony on behalf of the U.S. Department of Justice regarding the valuation of branching rights and RAP rights intangible assets. The Claims Court dismissed the plaintiffs' tax refund claims.
We provided valuation services to a professional basketball franchise owner as part of a complex estate plan and business succession plan. To assist our client with his overall estate planning objectives, we estimated the fair market value of both the NBA franchise and a partial ownership interest in the NBA franchise.
We were retained by tax counsel representing the estate of a large shareholder in a national media company. We estimated the fair market value of an approximately 10 percent block of the outstanding common stock. This company operated in the following industries: newspaper publishing, cable television, and book publishing. The fair market value of the estate's interest was approximately $50 million. Our stock valuation was audited by the Internal Revenue Service, and the Service accepted our valuation without any material changes.
We were retained to conduct a purchase price allocation for a major consumer products manufacturer. The transaction was structured as a taxable purchase of assets. As part of the purchase price allocation, we identified and valued the following Section 197 intangible assets: (1) trademarks and trade names, (2) customer relationships, (3) proprietary technology and technical documentation, (4) supply contracts, (5) computer software, (6) trained and assembled workforce, (7) licenses and permits, (8) product formulations and trade secrets, and (9) goodwill.
We estimated the fair arm's-length price (ALP) of the trademarks and trade names and the patterns and designs for an upscale women's fashion designer. The domestic corporation owner/operator transferred this intangible property to an offshore entity. The intangible property was licensed to the domestic parent corporation and to affiliated manufacturing entities in various countries.
We were retained by a leading oil and gas exploration and production company located in eastern Texas. The purpose of the engagement was twofold. First, we assisted in the structuring of a newly formed management services company. The services company was created to provide management, administration, and other services to the legacy operating company. As part of this structuring, we estimated the fair ALP for the services to be performed by the services company. Second, we estimated the fair market value of an ownership interest in the operating company, following the restructuring, for gift tax and estate planning purposes. Our valuation included an analysis of the operating company's oil and gas properties, related production equipment, and investments in other privately held ventures.
We valued the exempt (from property tax) intangible assets of a major Texas Gulf Coast oil refinery. At trial, we testified as to the fair market value of proprietary technologies, computer software, engineering drawings and technical documentation, licenses and permits, contracts and contract renewals, and a trained and assembled workforce.
For an electric generation facility in New York, the state property tax authority assessed the property based on a recent acquisition price. Our client was the corporate acquirer, a publicly traded energy company. We valued the intangible assets of the acquired electric generation facility, including power purchase and sale contracts, environmental credits, and operating manuals and procedures. After a review of our valuation, the assessment authority reduced the value of the taxable unit by the value of these intangible assets.
We quantified overall unit value adjustments for a centrally assessed telecom company due to functional (including technological) and external (including economic) obsolescence. These obsolescence analyses include inutility analyses, excess operating cost analyses, excess capital cost analyses, and fair return on investment analyses. In addition, we provided expert testimony related to these functional and economic obsolescence adjustments.
We performed the unit valuation of a centrally assessed Class I railroad. This engagement included the valuation of the exempt intangible assets included in the railroad overall unit value.
Transaction
Fairness, Solvency, and Other
Financial
Opinions
For both public company and private
company transactions, we provide
fairness opinions,
solvency opinions, reasonably
equivalent value opinions, and fair
market valuation opinions.
These financial opinions provide
comfort to buyer and seller boards,
financial
institutions, and other parties that
the pending transaction is fair from
a financial
perspective..
When one public telecom company acquired another public telecom company in a highly levered transaction, we provided the solvency opinion. This solvency opinion provided comfort to the boards of directors of both public corporations.
Transaction
Pricing and Structuring
We provide business valuations for
clients that are involved in the
purchase or sale
of a closely held company. These
transactions include company sales
to employees or to
management, the spin-off of public
corporation divisions or
subsidiaries, going-private
transactions, and private company
ownership transitions. We specialize
in designing
securities and complex capital
structures that meet the
requirements of a multiple
investor transaction.
For a medical device manufacturer
going through an
ownership transition, we designed
several classes of debt and equity
securities. Based on this
transaction structure, all
transaction participants—the
general employee, management, and
private equity
buyers, and
the selling shareholder and
mezzanine financing
sources—received securities that
satisfied their investment
objectives. Although complex, this
deal structure allowed the
transaction to proceed to closing.
Valuation Treatment of Built-In Capital Gains in a C Corporation
Valuation of Technology-Related Intangible Assets
The Valuation of Trademark-Related Intangible Property
Estimating Intercompany Transfer Price Trademark Royalty Rates
Intangible Property in Transfer Pricing Analyses
Fair Market Value and Blockage Discounts: When the Market Doesn't Give You the Answer
Regression Analysis and the Discount for Lack of Marketability
Development and Application of Management Projections in an ESOP Valuation
Issues Related to the Unit Valuation Principle
Market Approach Methods for Intangible Asset Property Tax Valuations
Valuation Analyses and the Commercial Bankruptcy
How to Estimate the Long-Term Growth Rate in the Discounted Cash Flow Method
Bankruptcy Litigation Valuation Guidelines
Functional Obsolescence and Economic Obsolescence Considerations in the Property Tax Valuation
Insolvency Procedures under Section 108
Tax Considerations of Close Corporation Buy/Sell Agreements
Valuation of Taxpayer Intellectual Property Assets for Ad Valorem Taxation
Valuation the Debtor Company Intellectual Property
Accounting Standards Codification Topic 450 and the Valuation of Contingent Liabilities