Alvarez & Marsal, a leading independent global professional services firm, has set the standard for working with organizations to solve complex problems, improve performance, drive critical change and maximize value for stakeholders.
In today's uncertain macro economy, companies—from sophisticated middle market businesses to complex major multinational entities—recognize that remaining competitive is more challenging than ever before. This is when leadership and a bias to action can make all the difference.
Success demands a clear path to results. Working with management of troubled or underperforming companies, A&M helps develop strategic plans to addresses challenges and opportunities, and build on core strengths.
Alvarez & Marsal's Transaction Advisory Group works with private equity firms, corporate acquirers, and hedge funds to identify and maximize value at every point in the transaction lifecycle.
Partner with the right expert team to navigate through a crisis or assist with a dispute.
Responsiveness. As tax law continues to increase in complexity and the stakes for businesses continue to rise, nothing is more important. Risk must be mitigated. Opportunities must be seized. Critical decisions must be made and implemented.
Alvarez & Marsal (A&M) Taxand provides the quality client service you need.
Companies, private equity and hedge funds, investors and parties to contracts deal with transactional information that has been recorded at fair value and often subject to periodic measurement of such.
Economic pressures, aggressive lending and increased risks have resulted in a wave of troubled balance sheets, prompting regulators to place heightened scrutiny on financial institutions. In this exceedingly complex landscape, lenders, policy makers, investors and consumers are facing unprecedented challenges.
Trends in public policy, shareholder powers and activism place increasingly complex interlinked demands for transparency and accountability from corporate board structures and functions.
Companies today face increasingly complex issues in structuring executive compensation and benefit programs, which are critical in attracting and retaining top talent. A well-designed benefits package is an important component of an executive’s financial arrangement and an organization’s business strategy.
Alvarez & Marsal (A&M) focuses teams of senior professionals directly on client issues.
High-profile struggles of giants such as General Motors, Chrysler and Ford have brought to the forefront the increasingly volatile market conditions facing today’s automotive industry. Uncertainty surrounding macroeconomic challenges and the liquidity of original equipment manufacturers (OEMs), as well as the supply base, makes the near-term seem bleak and uncertain. As a result, automakers and their suppliers, whether distressed, underperforming or healthy, are filled with a greater sense of urgency to stop crises in their tracks, rapidly improve performance and create sustainable growth.
The consumer packaged goods industry is at a crossroads. Given current economic realities, these organizations continue to be challenged as they balance gaining share of the consumer’s wallet while providing value to the consumer. Faced with pressures from retailers, the diminishing impact of advertising, as well as competition from high-quality private label offerings, many consumer packaged goods organizations are losing critical brand relevance and positioning in the retail battleground.
With deep industry experience and a hands-on approach, Alvarez & Marsal's energy team works with energy companies to improve performance, solve their most complex problems and deal with many of the challenges they face in today’s competitive environment.
The credit crisis has produced a global shockwave for the financial services industry. Lingering pools of troubled assets, increased regulatory implications, government assistance, as well as the fall of major players continue to present unique challenges along with complex, mounting pressures and aggressive legislative developments.
Healthcare organizations and their stakeholders face unprecedented challenges in managing the business of healthcare. These mounting pressures can undermine – if not outright threaten – the sustainable delivery of quality services.
Technology companies face myriad challenges to not only meet financial goals, but to remain competitive in a constantly changing and innovative landscape. Consumers are increasingly savvy in technology capabilities and, consequently, are more sophisticated in their demands. In an economic downturn, technology businesses face budget cuts, declining sales and a decrease in consumer demand. To weather the storm, cost savings are crucial to firms that are struggling amid distressed market conditions.
Organizations and regulators across the insurance industry face complex challenges to improve performance, meet financial and operational targets, and navigate compliance issues. The Insurance Advisory services practice of Alvarez & Marsal (A&M) draws upon the firm's distinctive operational heritage to deliver results.
Manufacturing, which accounts for 18 percent of world GDP, is now facing its largest decline since World War II. Global competition, complex company structures, and emerging markets are challenging current business capabilities, while providing opportunities for prepared companies to gain market share. Input costs are challenging and IT and human capital investments are crucial considerations for all manufacturing businesses.
As communications, media, and entertainment companies continue to combat the complex challenges presented by the digital movement, plummeting ad revenues and consolidation, many recognize the significant opportunity the current landscape presents for improving the performance of their operations.
A&M helps public sector leaders to thoroughly analyze operations, seize opportunities and effect functional change to dramatically impact service delivery and budget management – in any economic climate.
How can A&M Real Estate Advisory Services ("A&M REAS") help your company – anywhere in the world? Today’s real estate landscape is more complex than ever – sovereign debt burdens, defaults and deleveraging, regulatory compliance, long-range sustainability and creative re-use, alignment between asset management strategy and property management implementation, and billions of dollars of dry powder looking for the optimal risk-adjusted return opportunities. A&M Real Estate Advisory Services professionals are experienced at addressing all of these issues and more.
In today's uncertain economy, retailers are filled with a greater sense of urgency to deliver near-term results and create sustainable models for future growth.
Cutthroat competition and the increasingly unforgiving credit markets are creating a variety of challenges for transportation and infrastructure companies. In an industry that requires significant capital expenditure and investment, and with long-term high fuel prices putting pressure on businesses, leverage is often necessary to maintain liquidity.
November 08, 2012
As the close of the calendar year quickly approaches, many alternative investment managers are holding preliminary discussions with auditors about the impact of recent regulatory and accounting guidance. Some have even started planning for interim testing as early as November.
To better understand the implications of comments from the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC), A&M offers several simple, yet effective, operational themes that can help smooth the path to closing the books on 2012.
Understand What You Own
Managers are well versed in the investment qualities of their portfolios, but are often, understandably, lacking in important knowledge regarding Fair Value. Most accounting guidance relates to Level II and Level III measurements, which are typically instruments or securities that trade very infrequently or not at all and, consequently, are often priced by reliance on traditional valuation models, reference to infrequent trades or recently issued, similar securities. Given these inherent complexities, it is critical to understand the Fair Value hierarchy of your portfolio in detail, particularly those investments that are material and have the potential for reclassification.
Regulatory bodies have increased their attention on “hard to value” Level III measurements while, at the same time, broadening their focus to Level II measurements. A leading practice is to analyze the portfolio and perform “deep dives” prior to year-end on your most risky assets. The definition of “risky” and the basis for any analysis will depend on the composition of your portfolio. Management should take a close look by assessing the portfolio in the context of the Fair Value hierarchy. One should expect material Level II measurements to receive as much scrutiny as those in Level III. Two important events support this position.
First, during the December 2011 AICPA National Conference on Current SEC and PCAOB Developments, both the SEC and the Public Company Accounting Oversight Board (PCAOB) reiterated a number of recent releases and “Dear CFO” letters regarding management’s responsibilities regarding Fair Values obtained from broker quotes and third-party pricing providers.
Publicly available SEC comment letters to registrants regarding their use of pricing services in connection with valuation include:
Describe in detail:
Explain whether the information you receive is the actual quantitative inputs used in the pricing services valuation techniques and, if so, how you evaluate this information.
Explain whether you receive quantitative input information for all services or a sample.
Second, in May 2011, the FASB issued Accounting Standards Update No. 2011-4 Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (ASU 2011-4), requiring several new disclosures, most of which were implemented by companies earlier this year (although some are not required for non-public entities). These disclosures include:
Again, a complete understanding of what you own helps reduce the risk of responses that do not provide clear evidence of a robust internal process for assessing the reasonableness of the approach used by the pricing service, which can help reduce or eliminate additional SEC comments.
It is important to note that, at the same time, auditors also must respond to comments from the PCAOB regarding audit evidence and substantive testing of valuations and will, therefore, be simultaneously updating their understanding and testing of controls related to Fair Value, often by leveraging in-house specialists.
Let Your Valuation Memo Do the Talking
Just as “less can be more,” sometimes “more can be more.” Help yourself optimize communications by drafting valuation memos that serve not only as an informational update, but also as a “road map” of robust and consistently applied internal processes and controls to potentially uninformed outside parties. This effort can also highlight steps taken to address specific regulatory concerns. As valuation memos now serve as more than just guides to outside parties performing due diligence on your Fair Value conclusions, consider addressing the following issues:
You Do the Talking
The quickest, most effective way to avoid last minute problems is to create an organizational chart and pick up the phone. Both can pay huge dividends, yet often are put off until the last minute or avoided altogether.
From an organizational perspective, placing all necessary files in a central repository saves time when responding to outside inquiries. Any valuation-related files, such as a documentation of price challenges to third-party servicers and related responses, should be centralized in one location. Below is a sample list of documents to consider including in such a repository:
Additionally, management should communicate with investors and auditors regarding any new issues that may influence valuation processes and conclusions, including the impact of ASU 2011-4. It is important to note that this guidance is not intended to result in a change in the application of the requirements outlined in Topic 820, but rather clarify the intent of those guidelines and the disclosures surrounding Fair Value measurements. Managers should assess the expected impact of ASU 2011-4 on a given portfolio and existing valuation processes, as this new guidance is likely to be a point of focus at year-end.
As Fair Value guidance continues to evolve, both investors and regulators will continue to demand more rigor and transparency throughout the valuation process. Many alternative investment managers have already started addressing these new issues, while others may be just starting. Regardless of your current level of preparedness, keeping these themes in mind can provide operational and reputational benefits well beyond year-end.
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