The long-awaited opinion issued in late June by the U.S. Supreme Court clarified the constitutionality of the Patient Protection and Affordable Care Act of 2010 (“PPACA”).  The Court ruled that the requirement that every American carry health insurance is a tax and as a result, is constitutional.   The ruling permits the federal government to pursue a broad expansion of the Medicaid health program for the poor.

The Japanese tsunami and resulting tragic accident at the Fukushima Daiichi nuclear power plant forced a pause in the growing positive sentiment behind this source of power. While opinions appear to have turned against growth in this sector there is still substantial infrastructure that needs to be maintained. These factors might have led a number of investors and acquirers to move away from this segment and focus on other parts of the power industry. The transaction data disputes this and shows that interest in companies that serve the nuclear industry remains strong.

PCE Investment bankers advised Clune Construction Company in the formation of an Employee Stock Ownership Plan ("ESOP") in which the ESOP acquired a minority stake from the Company. PCE also assisted the Company in securing the senior financing to support the transaction."We have always believed in employee ownership and are excited to extend that benefit to all of our employees through the ESOP." Michael T. Clune, CEO, Clune Construction Company. "We look forward to Clune Construction being employee owned for a long time to come." 

QuickRead, a primary source for current news and information highlights in areas of interest to the financial forensics consultant, published Robert Buchanan’s article Considering the Fair Market Value Standard When Evaluating Fractional Interests.

The healthcare industry is faced with slow revenue growth, uncertainties resulting from healthcare reform and the economy in general.  As a result, hospitals and healthcare providers are looking to cut expenses and increase efficiencies or to consolidate in the hopes of streamlining operations and gaining pull with the industry payors.  As strategic mergers and acquisitions in the sector continue, private equity firms are positioning to capitalize on this industry in transition.  BDO, the national accounting and consulting firm, recently released a study, which showed 21 percent of private equity professionals (the second largest percentage of all respondents) see the greatest opportunities for new investments, during the next 12 months, in the healthcare and biotech industries.

The abundance of natural gas in the U.S. has resulted in a number of interesting circumstances. First, the supply of natural gas has increased to the point where storage facilities are close to capacity. Second, due to high levels of supply prices have dropped dramatically, which has resulted in a greater proportion of the U.S.’s power generation being derived from this fuel. Third, prices are expected to remain low due to the high levels of supply that have yet to be tapped. Fourth, the infrastructure to transport the natural gas from the point of extraction to the end user is still being built. Fifth, natural gas is accepted as a cleaner fuel for power generation. This confluence of factors has created depressed prices for natural gas, but the segments that use and support the extraction and use of natural gas are experiencing exceptional growth not only in revenues and profits, but also merger and acquisition activity.

Today is one of the most interesting times in recent history to be the owner of a privately-held business as these owners find themselves experiencing a rebound in the domestic economy but facing an uncertain tax environment. The question that many business owners are asking themselves is do we monetize some or all of our company today and capture the increased value of the business and lower tax rates or do we stay invested and realize further value appreciation but risk a higher tax environment. While the path becomes clear for many business owners, many remain in a quandary. The answer for these individuals may lie somewhere in the middle where they can monetize some of their investment in the current low tax rate environment, keep significant ownership for future appreciation and reduce their corporate and individual tax profiles. These are all achievable goals by executing a sale of a portion of their company to an Employee Stock Ownership Plan (ESOP).

There have been some recent changes to the ever-complicated rules governing goodwill, fair value, impairment testing. Previously, an entity which recorded goodwill as part of a transaction was required to test the goodwill for impairment at least annually. The test consists of two parts, the first of which is comparing the current fair value of the reporting unit, in which the goodwill is recorded, to the carrying value of the reporting unit. This step requires the valuation of the reporting unit.

The volume of M&A transactions remained relatively flat in first quarter of 2012 when compared to recent periods.  However, an interesting observation is that M&A market activity now (15,488 transactions) exceeds the transaction volume of FY 2007 (12,363) by approximately 25%. Remember, that FY 2007 was the peak of activity for M&A transactions.

Implementing an Employee Stock Ownership Plan (ESOP) as part of a diversification or exit strategy for business owners fell out of favor in recent years as the credit crisis reduced liquidity options. All evidence, including recent transaction activity, indicates liquidity has returned to the ESOP market. This development, coupled with several research studies completed by various academic and non-profit research institutes, makes the sale to an ESOP a compelling strategy for today’s business owners who want to participate in the future growth of their business while diversifying personal assets.