Appraisal Economics Inc. valued rights to receive a portion of royalties on sales of one of America’s oldest and best known brands of oral care products. The royalties are paid by a $200 billion healthcare conglomerate, and are based on a contract originally signed in the 1800s. Appraisal Economics determined the fair market value of the royalties for estate tax purposes.
EQUITY IN A PRIVATELY HELD INTERNATIONAL CONGLOMERATE
Appraisal Economics Inc. valued a non-controlling interest in a holding company that owns a minority interest in a privately held international conglomerate that is headquartered in Russia. The operating company has several dozen subsidiaries in Europe and Asia that specialize in oil and gas, construction, telecommunications, and finance. Our valuation included analyzing the recent sale between third parties of shares of common stock in the underlying operating company. To determine the current value of the operating company’s common stock, we adjusted for changes in the company’s financial performance, industry and economic conditions, and currency exchange rates. The concluded value of the interest in the holding company that owns the conglomerate’s shares reflected incremental discounts for lack of control and lack of marketability. Our valuation was used for gift and estate tax planning purposes.
GOODWILL IMPAIRMENT TESTING OF A BUILDING MATERIALS MANUFACTURER
Appraisal Economics Inc. has conducted a goodwill impairment analysis for a leading manufacturer of synthetic building materials. The company produces decking, railing, and lighting innovations, bathroom partitions, and a variety of other synthetic building materials and products designed to replace wood, metal, and other traditional materials for commercial and residential applications. Appraisal Economics valued the business enterprise to assess whether the company’s goodwill was impaired under ASC 350. Once goodwill is placed on the balance sheet due to an acquisition it must be tested at least annually for impairment.
PURCHASE PRICE ALLOCATION OF AN INTEGRATED PAPER COMPANY
Appraisal Economics Inc. has conducted a purchase price allocation of a fully-integrated paper mill in the Pacific Northwest. A private equity firm acquired the producer of containerboard, kraft and specialty papers, unbleached kraft pulp, and corrugated packaging for total consideration in excess of $100 million. The company operates a pulp and paper mill that processes raw timber and recycles old cardboard boxes and sells its products primarily in North America and Asia. Appraisal Economics allocated the purchase price among the financial, tangible, and intangible assets of the company. The assets included real property in two countries, machinery and equipment, favorable power purchase agreements, trademarks, customer relationships, and goodwill. Once goodwill is placed on the balance sheet due to an acquisition, it is tested at least annually for impairment.