Valuation Services. Global Capabilities Delivered Locally KPMG LLP

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1 Valuation Services Global Capabilities Delivered Locally KPMG LLP

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3 Today s global environment has elevated the importance of valuations that support financial reporting, tax planning, litigation, and mergers and acquisitions. An adviser with international experience and presence can help companies respond to both domestic and cross-border valuation challenges. Your adviser should be fluent with domestic and multinational regulations, be able to apply this knowledge across multiple industries and countries, and have a strong reputation for independence and integrity in the global community. KPMG has the international coverage, experience, and trusted name you can rely on to help you meet your valuation needs. With valuation professionals located in nearly 50 countries, our global network can provide the in-depth knowledge that your business requires. These teams include country-specific professionals with familiarity of regional market conditions who can consider local issues such as taxes and market regulations. It s with this global mindset and local understanding that KPMG professionals can apply forward-thinking insight to your business strategy. We recognize that a valuation is not a simple numbers exercise. Instead, we combine our technical skills and practical experience to provide objective advice that aligns with your business goals. We work to understand your business dynamics, as well as sector and value drivers to provide service that goes beyond borders. KPMG s Valuation Services. Global Capabilities Delivered Locally

4 2 VALUATION SERVICES KPMG s Valuation Services Team can help you address your valuation requirements with greater efficiency and confidence. Our services include appraisals of entire businesses, subsidiaries, joint ventures, equity interests, and specific assets such as stock, intellectual property, machinery and equipment, inventory, real estate, and financial instruments. Estimating the economic lives of tangible and intangible assets is also an integral part of our practice. Why KPMG? Depth of Experience KPMG s valuation professionals operate in all major markets in the United States. These professionals have varied credentials. Many hold advanced degrees in business, tax, engineering, or economics and many are chartered financial analysts or certified appraisers. Our management team averages more than 13 years of valuation experience serving numerous FORTUNE 1000 companies. This team draws from KPMG s extensive experience in accounting, tax, and advisory services along with broad industry knowledge. 1,200+ Valuation Professionals 50 Countries Globally, the member firms of KPMG International have more than 1,200 valuation professionals. Team members are located in nearly 50 countries, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Russia, South Africa, Spain, the United Kingdom, and the United States.

5 VALUATION SERVICES 3 Multinational Client Experience International experience and a strong reputation with U.S. and foreign regulatory agencies are critical in supporting the valuation requirements of global companies. Projects of this scale generally require extensive international coordination as well as country-specific fluency. Our U.S. valuation professionals have significant experience in working with multinational companies in conjunction with teams from KPMG member firms. Our breadth and depth of experience helps bring clarity to your complex issues while our reach enables us to mobilize international teams quickly. As a result, you receive responsive and consistent service. Our ability to meet clients valuation needs also is supported by our working relationships with many of our clients audit and tax advisers around the world. Reliability KPMG has established and is committed to maintaining rigorous quality assurance policies and work processes that provide for a well-managed engagement. We employ proprietary models and tools to support client objectives in compliance with applicable rules and regulations. Our analysis is based on insight into the relevant valuation methodologies and approaches and takes into consideration the facts and circumstances of each engagement. Industry Experience KPMG maintains a focus around key industries including: Consumer Markets Energy & Natural Resources Financial Services Government Healthcare & Pharmaceuticals Industrial Markets Information, Communications & Entertainment Private Equity and Sovereign Wealth Funds We understand the issues, valuation drivers, leading practices, and trends that shape a particular industry s future. This understanding allows us to staff our engagements with knowledgeable professionals experienced in your industry. And, when needed, we can quickly tap into industry-experienced professionals from other disciplines, including audit, tax, and advisory in the United States and internationally.

6 4 VALUATION SERVICES Based on our in-depth knowledge of fair value measurement concepts, we understand how the requirements of fair valuation measurement for financial reporting purposes may differ from valuations for tax purposes Familiarity with Regulatory Requirements KPMG has extensive experience working with the Securities and Exchange Commission (SEC), Financial Accounting Standards Board (FASB), Internal Revenue Service (IRS), principal court jurisdictions, and comparable regulatory bodies in many other countries. Our broad experience can help you better understand how these regulatory authorities could potentially view your positions on valuation issues. We also can help you resolve questions and respond to comment letters. Since the introduction of FASB ASC Topic 805, Business Combinations (originally issued as FASB Statement 141R) and FASB ASC Topic 350, Intangibles Goodwill and Other (originally issued as FASB Statement 142), a significant focus of valuation work has been on the application and implementation of these acquisition accounting and goodwill impairment requirements. KPMG professionals have worked with many FORTUNE 100 companies on valuation issues associated with business combinations and goodwill impairment implementations. The ability to gain timely insight from our in-house review partners better positions us to support management in its application of the standards. We also routinely interface with accounting and tax professionals from other Big Four accounting firms and are in regular contact with the FASB and SEC. Based on our in-depth knowledge of fair value measurement concepts, we understand how the requirements of fair valuation measurement for financial reporting purposes may differ from valuations for tax purposes. This understanding is critical to successful completion of large financial reporting and tax valuation projects and is often an area where substantive issues can arise.

7 VALUATION SERVICES 5 Financial Reporting FASB ASC Topic 825, Financial Instruments (originally issued as FASB Statement No. 107 and FASB Statement No. 159) FASB ASC Topic 718, Compensation Stock Compensation (originally issued as FASB Statement No. 123R) FASB ASC Topic 815, Derivatives and Hedging (originally issued as FASB Statement No. 133) FASB ASC Topic 350, Intangibles Goodwill and Other (originally issued as FASB Statement No. 142) FASB ASC Topic 360, Property, Plant and Equipment (originally issued as FASB Statement No. 144) FASB ASC Topic 805, Business Combinations (originally issued as FASB Statement No. 141R) FASB ASC Topic 820, Fair Value Measurements and Disclosures (originally issued as FASB Statement No. 157) Fresh-start accounting Foreign financial reporting requirements (e.g., IFRS and IAS) Stock options and cheap stock issues Circumstances Requiring a Valuation Our professionals have the deep technical skills and experience to assist in many types of valuations. Tax Reporting IRC 108, Debt Cancellation IRC 165, Worthless Stock IRC 170, Charitable Donation IRC 280G, Management Compensation IRC 304, Cross Chain Sale of Shares IRC 338, Purchase Allocation IRC 355, Tax-Free Distribution IRC 367, Foreign Stock Transfer IRC 382, Net Operating Loss IRC 409A, Nonqualified Deferred Compensation IRC 468B, Asbestos Reorganization IRC 475, Mark to Market IRC 482, Transfer Pricing IRC 864, Interest Expense Allocation IRC 897, FIRPTA State and local tax Gift and estate tax Restructuring Economic Pricing analysis Buy- and sell-side assistance Fair market value opinions Intellectual property licensing Complex financial instruments Synergy assessment Operational risk ERISA/ESOP Joint ventures Economic value added ROI and business case analysis

8 6 VALUATION SERVICES Our Portfolio of Services KPMG provides a wide-ranging portfolio of valuation services. Since valuation issues are related to broader business activities, we work closely with other KPMG practices, including Financial Risk Management, Forensic Services, Tax, Transaction Services, and Transfer Pricing. We provide clients with assistance in the following areas: Financial Reporting Determine the fair value of tangible and intangible assets acquired in a business combination Determine the fair value of reporting units when performing goodwill impairment tests Review impairment analyses of long-lived assets (FASB ASC Topic 360, Property, Plant, and Equipment [originally issued as FASB Statement 144]) from a valuation perspective Review and assess the information used to measure fair value (FASB ASC Topic 820, Fair Value Measurements and Disclosures [originally issued as FASB Statement 157]) Assess the fair value-based measure of employee stock options and other equity-based compensation programs (FASB ASC Topic 718, Compensation Stock Compensation [originally issued as FASB Statement 123R]) Tax Planning and Compliance Advise on taxable corporate reorganizations, recapitalizations, and changes of control Allocate purchase price for certain stock and asset acquisitions Value non-compete covenants Perform gift and estate tax valuations to facilitate stockholder transfers and employee stock ownership plan transactions Assets We Value Businesses and Business Interests Common stock Preferred stock Debt securities Stock options and warrants Partnership interests LLC interests Branches and divisions Portfolio investments Subsidiaries Intangible Assets and Intellectual Property Patents In-process research and development and proprietary technology Customer-based intangible assets Trade names, trademarks, and brands Computer software and systems Databases Supplier contracts License and franchise agreements Non-compete agreements

9 VALUATION SERVICES 7 Acquisition, Merger, and Divestiture Advise on the valuation of an acquisition or sale of a division or company Model potential operational and tax-related synergies Assess a company s value for bidding- or asking-price purposes Provide valuation analysis to assess existing and proposed capital structures Litigation Support and Intellectual Property Provide support in forensic accounting and dispute resolutions, arbitration, purchase price disputes, economics, business valuation, technology, statistics, and other professional fields Appraise intellectual property assets such as patents, trademarks, trade names, copyrights, computer software, research and development, and proprietary technology Review license and franchise agreements from a valuation perspective Restructuring, Turnaround, and Bankruptcy Conduct valuations for debtors, creditors, equity stakeholders, secured lenders, and other constituents, including enterprise valuation, asset valuation, and intangible valuation for alternative restructuring scenarios, fresh-start accounting purposes, and/or tax purposes Perform liquidation and going-concern valuation analysis Conduct asset valuation studies under fresh start accounting guidelines Perform valuations in conjunction with asset sales under Section 363 of the Bankruptcy Code Tangible Assets Machinery and equipment Furniture and fixtures Computer equipment Office equipment Real property Inventory Financial Instruments Loans and loan pools Leases Leveraged finance loans High-yield bonds Commercial mortgage-backed and other real estate securities Preferred securities Forwards, swaps, and options (e.g., put or call options, caps, floors, collars, swaptions) Forward-like contracts with option-like characteristics (e.g., callable swaps, amortizing swaps) Private equity, hedge funds, and fund of fund investments

10 8 VALUATION SERVICES Planning and Decision Support Provide valuation advice for investment and capital expenditure assessment Assist in prioritizing investment opportunities using valuation analytics Measure results to determine how an initiative or decision affects return on investment (ROI) and shareholder value Advise on client efforts related to financial modeling and sensitivity analysis Help develop a sound business case to enlist management support or attract equity partners Analysis and Valuation of Derivatives Value derivatives, including swaps, caps, and floors; including calls, puts, and exotic options; embedded derivatives; and credit derivatives Analyze hedged positions in accordance with FASB ASC Topic 815, Derivatives and Hedging (originally issued as FASB Statement No. 133) Value complex instruments, including fixed-income and equity-linked securities (for example, mortgage-backed securities, bonds and structured notes, and equity-linked notes with different forms of conversion features) Value employee stock options using a binomial option model as well as other option models Special Resource on Valuation Matters KPMG s Global Valuation Institute KPMG s Global Valuation Institute (GVI) sponsors research and supports dialogue on current valuation matters affecting companies, investors, and regulators. Comprised of valuation professionals from KPMG International member firms and leading academics, the GVI s mission is to produce thought leadership intended to improve business decision-making, interpret complex issues within our profession, and establish a fact base for regulatory agencies and professional organizations. For more information, visit For more information on how KPMG s Valuation Services can help your organization, please contact your local KPMG professional. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Due to independence considerations, certain services may not be available to audit clients. affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in the U.S.A. KPMG and

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