What are ALM First's Merger Valuations?
Merging entities can be a daunting process on multiple fronts, especially knowing that properly combining balance sheets is critical to future success. You must assess the viability of a merger and decide whether such a strategy is congruent with company goals and culture. Moreover, the required documentation can cause additional questions and confusion.
ALM First serves as your trusted partner, streamlining a complex process and providing strategic insights. Ease the way to merger and acquisition decisions with our premier team of valuation experts, who will deliver a complete, turnkey merger valuation solution that meets ASC 805 requirements.
Utilize ALM First’s Expertise
ALM First prides itself in its independent, holistic advice, having performed over 100 merger and acquisition transactions. Our core philosophy revolves around assessing the greater need of your balance sheet, and as a trusted partner, we help our clients manage risk, enabling them to grow and scale.
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Comprehensive Merger Valuation
The Comprehensive Merger Valuation solution is highly detailed and analyzes each loan at the loan level. The components of the Comprehensive Merger Valuation service, required under ASC 805, performed by ALM First include:
- The entity value, which determines the acquisition value of the Target institution, and becomes the new equity of the Target concurrent with the closing of the merger
- Fair valuation of the financial assets (investments and loans) and financial liabilities (deposits and borrowings) of the Target’s balance sheet
- The fair valuation of the intangible assets, typically the core deposit intangible (CDI) and mortgage servicing rights (MSRs)
- A determination of the resulting goodwill (or negative goodwill) based on the foregoing valuations as well as any adjustments determined by third parties for fixed assets and repossessed assets, and other non-financial assets and liabilities
MacroView Merger Valuation
ALM First’s MacroView Valuation service has been designed for those instances where the Comprehensive Merger Valuation product is not required due to immateriality or for circumstances where the parties must have an understanding of the fair value estimates consistent with ASC 805 prior to executing a merger. Our MacroView Valuation provides critical insights into the acquirer’s management and board of directors without the detailed loan level analysis that is required for accounting purposes.
Highlights of the service include:
- Detailed information ideal for discovery and planning purposes
- Broad, high-level view of an institution’s worth
- Loans pooled by type to determine value
- The impact to capital
- Fair valuation of the intangible assets
Goodwill Impairment Testing
The Goodwill Impairment Testing Service is designed to test for impairment after the merger is completed. This level of service entails a two-step test that is used to identify potential goodwill impairment.
The first step compares the entity value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, thus the second step of the impairment test in unnecessary.
The second step compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.
The Fairness Opinion Service is designed to provide a fair value range of an institution in order to determine if a change-of-control transaction is fair from a financial perspective. In comprehensively examining the deal economics, ALM First will perform the following analyses with intellectual rigor: comparable company, precedent transaction, discount cash flows, control premium, and accretion/dilution analysis where applicable.
ALM First issues fairness opinions for affiliate and insider transactions, related-party transactions, synergistic mergers, business combinations involving competing offers, and down-round financings.