Global BV News and Trends February 2022
Business valuation news from a global perspective.
Global BV News: European goodwill impairment up 49% in 2020
Total goodwill impairment recorded by European-listed companies in the STOXX® Europe 600 increased for the third consecutive year, rising 49%, to €54.1 billion (bn) in 2020, according to the “2021 European Goodwill Impairment Study,” from Kroll.
Intangibles, ESG, and digital assets are on the FASB’s new research agenda
In response to feedback received in an agenda consultation, the Financial Accounting Standards Board (FASB) announced that its research agenda now will include the following projects.
Appeals court OKs one discount, KOs another in divorce matter
In a California divorce matter, the husband’s expert applied two discounts to the valuation of the wife’s one-half interest in his business: one discount for possible future taxes and one for a discount for lack of marketability (DLOM).
Global BV News: IASB’s Barckow on divergence with FASB regarding goodwill impairment
At the recent AICPA and CIMA Conference on current SEC and PCAOB developments, Andreas Barckow, chair of the International Accounting Standards Board (IASB), discussed the board’s key projects, one of which is goodwill impairments.
In re Platinum Corral, LLC
The Bankruptcy Court turned down a plan and amended plan of reorganization primarily because only the debtor would benefit from the plan and creditors would be left with little or no return. The court ordered a new plan be delivered to the court as soon as possible because time was of the essence.
Plan of Reorganization Cannot Be Approved Because Essentially Only the Debtor Would Benefit
The Bankruptcy Court turned down a plan and amended plan of reorganization primarily because only the debtor would benefit from the plan and creditors would be left with little or no return. The court ordered a new plan be delivered to the court as soon as possible because time was of the essence.
In re Multiplan Corp. Stockholders Litig.
This case dealt with a motion to dismiss the claims of the plaintiffs (by the defendants) in a stockholder suit against a special purpose acquisition company (SPAC). The claims were primarily that the plaintiffs’ claims were derivative, which failed to plead demand futility and that the business judgment rule applied. Many of the parties’ arguments centered around unique characteristics of a SPAC. In concluding that the entire fairness standard of review applied, the Delaware Chancery Court noted that “the fact that a reasonably conceivable impairment of public stockholders’ redemption rights—in the form of materially misleading disclosures—has been pleaded in this case.” The case was to go forward against all but two defendants.
Delaware Chancery Court Allows Breach of Fiduciary Suit to Move Forward on a SPAC
This case dealt with a motion to dismiss the claims of the plaintiffs (by the defendants) in a stockholder suit against a special purpose acquisition company (SPAC). The claims were primarily that the plaintiffs’ claims were derivative, which failed to plead demand futility and that the business judgment rule applied. Many of the parties’ arguments centered around unique characteristics of a SPAC. In concluding that the entire fairness standard of review applied, the Delaware Chancery Court noted that “the fact that a reasonably conceivable impairment of public stockholders’ redemption rights—in the form of materially misleading disclosures—has been pleaded in this case.” The case was to go forward against all but two defendants.
BV News and Trends December 2021
A monthly roundup of key developments of interest to business valuation experts.
Harvey v. Harvey (In re Michael S.)
In this divorce case, on appeal, the California appellate court rejected a discount for taxes not immediate and specific and allowed a DLOM regarding the value of the wife’s one-half interest in the jointly owned business. The court also determined that “the [trial] court impliedly made the factual findings necessary to support its ruling regarding Cynthia’s breach of fiduciary duty claim.” Finally, the appeals court determined that the trial court had the authority to set its own terms for payment of the equalization amount to the wife.
In a Divorce Case, the California Court of Appeal Rejects Discount for Taxes Not Immediate and Specific But Allows a DLOM
In this divorce case, on appeal, the California appellate court rejected a discount for taxes not immediate and specific and allowed a DLOM regarding the value of the wife’s one-half interest in the jointly owned business. The court also determined that “the [trial] court impliedly made the factual findings necessary to support its ruling regarding Cynthia’s breach of fiduciary duty claim.” Finally, the appeals court determined that the trial court had the authority to set its own terms for payment of the equalization amount to the wife.
Impairments triggered by climate change
For the first time in a securities filing, Exxon Mobil Corp said that some of its oil and gas properties may face impairment due to climate change, according to a report in Reuters.
CFAs support annual testing for goodwill impairment
Global standard-setters, such as the Financial Accounting Standards Board (FASB) in the U.S., are revisiting the issue of annual impairment testing versus amortization of goodwill.
SEC Comment Letters Reveal COVID-19 Impacts—and Much More
How to benefit from the great deal of useful information about fair value measurement issues in comment letters the Securities and Exchange Commission (SEC) sends after it reviews public companies’ financial statements and disclosures.
Free webinar reveals what’s new in goodwill
The amount of goodwill on corporate balance sheets is at the highest level since 2017—and it’s growing.
New case to address goodwill impairment dispute
Goodwill impairment does not appear often in litigation, but a court case in Tennessee will go forward after a judge ruled not to dismiss the plaintiff’s claims.
Strougo v. Tivity Health, Inc.
In this case regarding alleged fraud in the purchase or sale of securities, the defendants pled a motion to dismiss the plaintiffs’ claims. The parties categorized the defendants’ alleged misstatements into two groups: (1) the Nutrisystem claim, where the defendants allegedly misled investors as to the success of the Nutrisystem acquisition; and (2) the goodwill claim, where the defendants allegedly impaired goodwill by carrying goodwill at a value that exceeded its implied fair value. The court denied the motion to dismiss.
Court Denies a Motion to Dismiss Plaintiffs’ Claims That Defendants “Hid” Losses and Impaired Goodwill
In this case regarding alleged fraud in the purchase or sale of securities, the defendants pled a motion to dismiss the plaintiffs’ claims. The parties categorized the defendants’ alleged misstatements into two groups: (1) the Nutrisystem claim, where the defendants allegedly misled investors as to the success of the Nutrisystem acquisition; and (2) the goodwill claim, where the defendants allegedly impaired goodwill by carrying goodwill at a value that exceeded its implied fair value. The court denied the motion to dismiss.
SEC comment letters uncover COVID-19 disclosures per PwC analysis
Valuable information can be gleaned about fair value measurement issues from comment letters the Securities and Exchange Commission (SEC) sends after it reviews public companies’ financial statements and disclosures.
Business Combinations and Fair Value for Financial Reporting
Are you confused by business combinations? Join William Kennedy for this engaging session covering GAAP fair value standards and their application in business combinations. Hear a discussion of the nuances of the GAAP fair value standard and history of how it was developed as part of the GAAP-IFRS convergence project. Also learn how the valuation approaches and methods used in fair value assessment differ from valuation approaches used in a fair market value appraisal.
BV News and Trends May 2021
A monthly roundup of key developments of interest to business valuation experts.
BVU News and Trends April 2021
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends March 2021
Business valuation news from a global perspective.
Goodwill impairments fell 10% in 2019: D&P study
Total goodwill impairment declined to $71 billion in 2019, down 10% from $78.9 billion in 2018, according to the “2020 U.S. Goodwill Impairment Study” by Duff & Phelps.
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