Expertise: Mr. Purcell has over 50 years of experience in every area of investment banking including the following:
Mergers & Acquisitions
Leveraged Buyouts and Recapitalizations
Fairness Opinions and Fairness Issues
Bankruptcy issues, including fraudulent conveyance
Advice to Special Committees of Boards
Due Diligence and Disclosure Issues
Damage issues and analysis
Document Interpretation and Standards from investment banking point of views
Criminal cases involving alleged securities violations and insider trading
Financing of Debt and Equity (both public and private, taxable and tax-exempt, including structured financings)
Leasing and Real Estate Financing
Background: Mr. Purcell was a Managing Director at Dillon Read for almost 25 years and has been a Senior Advisor to a number of medium-sized investment banks. He also has served as interim CEO of a public company and has served on Boards of Directors. Mr. Purcell is currently Senior Director to the Investment Banking Firm of Seale & Associates, Washington, DC. area. Mr. Purcell has been an expert in more than 200 cases with over 180 Law Firms, including cases for the SEC, IRS and the DOJ. Has testified in court trials and arbitration trials over 40 times. He represents both plaintiffs and defendants. Subjects include all areas mentioned above.
MCS Associates is a nationally recognized consulting group that has provided financial, operations and regulatory/compliance consulting services nationwide to financial institutions, insurance companies and regulatory agencies as well as real estate and financial services organizations for over 40 years. Expert Witness and Litigation Consulting are a primary focus of our services. We undertake expert witness assignments throughout the United States and our clients include several hundred leading law firms around the country, working on behalf of both plaintiff and defendant financial institutions, borrowers, depositors, investors, developers, insurance companies and their insured, securities/insurance/real estate brokers/agents, regulators and government agencies, and individuals.
Together with MCS Associates’ specialized resources in banking, financial services and real estate, we also draw on key strategic alliances in insurance, economics, academia and the securities industry to meet a wide range of expert witness needs. Our litigation experts include experienced bankers, lenders, consultants, regulators, managers, brokers & agents in insurance, real estate, and securities; insurance claims and underwriting managers; economists, accountants, appraisers, real estate analysts, and academics.
Bryan L. Parker, CPA/PFS, CFP, CLU, ChFC, CASL, FCPA, is a Certified Forensic Accountant with over 30 years of experience in his field.
Background - Prior to founding Bryan L. Parker, CPA, LLC, Mr. Parker held the position of CFO at McPherson Oil Company ($300 million + annual revenues) where he was responsible for advising and negotiating banking relationships, acquisition review, acquisition integration, financial reporting, and interaction with external auditors. His experience also includes serving as VP of Mergers & Acquisitions for Citation Corporation (Public Co.) and CFO of TIC United Corp., Dallas, TX ($300 million + revenues).
Mr. Parker has performed business valuations for more than 100 businesses in a variety of industries including manufacturing, trucking, printing, fuel oil distribution, motor/lubricating oil distribution, professional services, restaurants, fast food franchises, metal foundry, metal forge, machining, and plastic injection molding.
Litigation Support - Mr. Parker provides expert witness services to attorneys representing both plaintiff and defendant. He offers Forensic Accounting services, written reports, deposition, and trial testimony as needed.
BTI Appraisal is a broad-based appraisal company which provides a consistently high level of Real Estate Appraisals, Business Valuations, and Machinery and Equipment Appraisals for Business, Professional, Public and Private Sectors. When you choose BTI Appraisal, you benefit from a strong tradition of experience and accuracy.
A corporate philosophy stressing efficiency and attentive service has made BTI a leader among independent appraisers. They are proud of their reputation for stability, responsiveness, and accomplishment in and out of the courtroom. At BTI, their seasoned staff of success oriented professionals treats each assignment with precise attention to detail, providing needed research and responsive service on a wide range of appraisal needs.
Litigation Support - BTI’s Founder and Chairman, Ben F. Tunnell III, has headed the firm since 1974. Previously, he spent eight years with First Interstate Bank of California as vice president at their corporate headquarters in Los Angeles. He served on the board of arbitrators for both the American Arbitration Association and the Better Business Bureau. He has also been a Registered Investment Advisor and Broker/Dealer with the Securities and Exchange Commission and a licensed, California Real Estate Broker.
Mr. Tunnell is an ASA, the senior designation of the American Society of Appraisers, and a California Certified General Real Estate Appraiser #AG-6964. He has qualified and testified in Federal and Superior Courts, as well as in arbitration proceedings as an expert witness in Business Valuations, Real Estate, and Machinery and Equipment Appraisals.
Scott S. Miller, MBA, ASA, ABV, specializes in Business Valuation and Transaction Consulting for small to middle market companies. He has over 35 years of professional business experience that ranges from senior operations management with publicly-traded companies to handling all aspects of operations in small privately-held manufacturing and service businesses.
Along with an MBA from the University of Houston, Mr. Miller achieved the Accredited Senior Appraiser (ASA) designation from the American Society of Appraisers, the Accredited in Business Valuation (ABV) certification from the American Institute of Certified Public Accountants and has over 15 years of business / financial asset valuation and consulting experience. He is currently serving as Region 3 Governor for the American Society of Appraisers and is past President of the Houston Chapter for the ASA.
Prior to the formation of Convergent Capital Appraisers in 2007, Mr. Miller held positions with McClure, Schumacher & Associates, RR Donnelley Financial, several positions/locations with Bowne & Co., Inc., and Industrial Screenprint, Inc.
Litigation Support - Mr. Miller provides expert witness services to attorneys for plaintiff and defense in need of appraisal services. His expertise is in business valuation of closely-held businesses and the appraisal of fractional interests of equity holders. His services include thorough review and reporting, depositions, and trial testimony as needed.
Business valuation and appraisal services have been provided for a variety of purposes including, but not limited to:
Danny F. Dukes and Associates, LLC is a Forensic Accounting Firm that specializes in expert witness and litigation support services. We have investigated fraud and various financial transactions. We are extremely knowledgeable in all aspects of laws pertaining to banks, financial transactions and lending transactions.
Our founder, Danny F. Dukes, has spent over 30 years in the financial institutions and mortgage industry. Danny understands all aspects of mortgage and financial institution transactions including policies and best practices.
As a consultant, he has assisted community banks with investment management, asset liability management, investment banking, compliance issues, internal audit, bank operations, bank policies, and generally accepted accounting principles. He has assisted in a capital raise for de-novo banks. He has also served as a lead on the selection of data processing solutions and transition teams for mergers and acquisitions.
Donald M. May PhD, CPA, Managing Partner at DMA Economics, LLC, possesses over 30 years of Valuation and Economic Damages experience. He implements a broad range of damage analyses and valuations for clients, including billion-dollar investment funds under SEC investigation as well as multi-national firms involved in intellectual property disputes, consumers in product mislabeling cases, and small to mid-sized businesses involved in complex commercial litigation.
Background Experience - Prior to founding DMA Economics LLC, Dr. May was Managing Director at Berkley Research Group and the Principal in charge of valuation and litigation support services for a regional accounting firm, a Managing Director for PricewaterhouseCoopers, and a professor at the Massachusetts Institute of Technology - Sloan School of Management. He has performed over 200 valuations of closely held businesses across numerous industries for financial reporting and estate planning. Dr. May has been published in several distinguished academic and practitioner journals such as The Journal of Finance, The Quarterly Review of Economics and Finance, Hedge Fund Law Review, and is currently an editorial board member of The Journal of Business Valuation and Economic Loss Analysis.
Litigation Support - Dr. May is a world class expert in the Valuation of Damages. Dr. May has prepared expert reports and testified in federal and state courts as well as AAA, JAMS, and FINRA arbitration hearings, and has also effectively communicated as an expert witness testifier and consultant in several multi-million dollar cases.
Recent Litigation Matters:
Misrepresentations in Leveraged Buyout (“LBO”) Financing Practices
Theft of Trade Secrets, Trade Dress, and Intellectual Property
Food Product Mislabeling
Securities Fraud Under SEC Section 10b-5 and Section 11
Accounting Misstatements in Public and Private Company Acquisitions
Lost Profits and Lost Enterprise Value Associated with Product Defects and Breach of Contract
Mascara falsely labeled as being natural. Label claims “Natural” fibers on mascara are alleged and proven to be false. Class action filed and DMA Economics is tasked with computing aggregate damages to the class who purchased the mascara at a premium because they believed it was natural.
The fund managers were alleged to have violated their fiduciary duty to maintain proper diversification in the fund by allowing one particular security to make up more than 25% of fund value and up to over 40% of fund value by mid-2015.
This article finds evidence consistent with the hypothesis that managers consider personal risk when making decisions that affect firm risk. I find that Chief Executive Officers (CEOs) with more personal wealth vested in firm equity tend to diversify. CEOs who are specialists at the existing technology tend to buy similar technologies. When specialists have many years vested, they tend to diversify, however. Poor performance in the existing lines of business is associated with movements into new lines of business.
Dennis M. Giuffré is an Economist and Professional Engineer in private practice since 1978, and previously with the consulting firms, Allstates Engineering Company and Equitable Environmental Health, Inc.
Background Experience: Prior to a consulting career, Mr. Giuffré engaged in basic subsurface research at Texaco, Inc., corporate planning and development at the Gulf Oil Corporation, process engineering and design at the Petro-Tex Chemical Corporation, and process engineering and economics at the Olin Corporation, among other companies.
Economic Damages Expert Services: Mr. Giuffré provides expert witness services primarily in the area of Economic Damages, and in related economics and technical issues. He has been engaged by both plaintiffs and defendants, and has testified as an expert witness in federal and state courts, and in arbitration and administrative hearings.
Mr. Giuffré has been retained as a damages analyst and expert in insurance claim losses, patent and other intellectual property infringement, trade secrets misappropriation, antitrust, breach of contract, deceptive trade practices, unfair competition, unconstitutional taking, products liability, negligence, breach of fiduciary duty, fraud, defamation, slander, trespass, legal malpractice, and numerous other causes of action pertaining to business entities; as well as in personal injury, wrongful death, medical malpractice, discrimination, retaliatory discharge, class action, and other causes of action pertaining to individuals and households.
Fulcrum Financial Inquiry's analysis and research combined with unique presentation techniques have resulted in an unequaled track record in successful court cases and client recoveries. Their personnel are full time and fully focused on the services we provide. Fulcrum thoughtfully incorporates technology into their work to provide great results at a more reasonable cost.
Fulcrum's expertise encompasses damages analysis, lost profit studies, business & intangible asset valuations, fraud investigations, statistics, forensic economic analysis royalty audits, strategic & market assessments, competitive surveys, personal injury and employment damages, and a wide range of other financial advisory services. We serve the entire nation.
Renee K. Howdeshell is a CPA and Certified Fraud Examiner (CFE) with over 20 years of experience performing economic damages calculations. She has prepared numerous analyses and testified as an expert witness in federal court, CA state court and arbitration regarding lost profits, disgorgement or other matters involving accounting, finance or business valuation. She was previously honored by the National Association of Certified Valuators and Analysts as among the “40 Under Forty” who have made extraordinary advances in their field.
Ms. Howdeshell specializes in financial analysis and calculations involving disputes.She works with a broadrange of firms/industries in both litigation and non-litigation settings.Her usual assignments include lostprofits analysis, valuation, forensic accounting, and royalty and distribution audits.
Damage experts don’t always agree regarding the appropriate discount rate and underlying methodology for a lost earnings claim and certain commonly applied methods actually provide a windfall to Plaintiffs. The chosen rate can make a meaningful difference in the economic damages conclusion. A recent article, "Lost Compensation Settlement Tool Allows You To Assess Economic Damages Accurately And Efficiently, Under Various Scenarios", demonstrates the significance of the applied rate on damages.
The US Court of Appeals for the Ninth Circuit has opened the door significantly wider for those who wish to pursue qui tam False Claims Act suits by reversing a dismissal of two such matters. Ruling en banc in United States ex rel. Hartpence v. Kinetic Concepts, Inc., the Ninth Circuit has removed a prior restriction that any prior public disclosure must have originated from the whistleblower as well.
A recent case addressed the interesting question of whether a corporation could serve as an expert witness. The matter involved a breach of fiduciary duty case coordinated with an appraisal proceeding, in re Dole Food Company ("Dole"). The defendants designated Stifel, Nicolaus & Company, Incorporated ("Stifel"), a corporation, to serve as their expert witness regarding the value of Dole.
Royalty arrangements within patent licenses have long been constrained by an almost 50 year old Supreme Court decision in Brulotte v. Thys Co that prevents collection of royalties after a patent has expired. The Justices have now agreed to revisit the precedent set by that often-criticized ruling in a current case, Kimble v. Marvel Enterprises, Inc.
In a recent case involving the City of Pomona ("Pomona") v. SQM North America Corporation ("SQM"), Pomona alleged that SQM's importation of sodium nitrate for fertilizer caused a perchlorate contamination in the city. Although the district court excluded under Daubert the expert testimony of Pomona's expert witness on causation, the Ninth Circuit reversed the ruling, stating that "facts casting doubt on the credibility of an expert witness and contested facts regarding the strength of a particular scientific method are questions reserved for the fact finder". The case was remanded for trial.
In association with general cost cutting measures over recent years, many companies have pressured their vendors to reduce fees. This downward pressure has extended to the accounting firms hired to provide independent audit opinions, resulting in a significant drop in audit fees. According to Audit Analytics, audit fees in 2012 were $472 per $1 million of revenue, the lowest amount since 2004. The question is whether audit quality has been sacrificed in order to achieve these reductions.
The Eastern District of Texas is well known for its intense patent activity and already provides early disclosure of infringement and invalidity contentions to facilitate faster resolution of these cases. The Court has now taken similar action by providing an option for accelerated damage discovery, including requiring a two week turnaround between defendant's production of potentially infringing sales data and plaintiff's good faith estimate of damages. Accomplishing this will require expert assistance immediately in the process. Even for cases that do not settle, this damage estimate will inform the Court's discovery decisions and resource allocations.
In the course of affirming the district court's decision in Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store, Inc., 2013 WL 6017396, Judge Posner went a step further. While upholding the injunction, he ended his assessment with some comments "for future reference" when it comes to consumer surveys offered to demonstrate consumer confusion in support of a trademark infringement claim:
A recently affirmed decision to grant judgment for the defendant as a matter of law highlights the importance of expert testimony that is consistent with previously-disclosed opinions presented in a Rule 26 report. In Rembrandt Vision Technologies, Inc. v. Johnson & Johnson Vision Care, Inc., the expert's testimony was struck because of critical discrepancies, leaving the plaintiff with no basis for claimed patent infringement.
The decision in United States vs. Windsor (No. 12-301, June 26, 2013) by the U.S. Supreme Court (SCOTUS) to strike down Section 3 of the Defense of Marriage Act (DOMA) creates important tax issues and opportunities. These include potential refunds for same-sex married couples and their employers for years not closed by the statute of limitations.
A Delaware federal court recently closed the door on each of two possible paths to damages for Plaintiff in the matter of AVM Technologies, LLC v. Intel, Inc. (Civil Action No. 10-610-RGA). U.S. District Judge Richard G. Andrews granted Defendant's motion to exclude Plaintiff's expert, while also granting Defendant's motion in limine to preclude any proposed expert testimony from the inventor of the patent in question.
In re: Apple vs. Motorola, the parties sued each other for patent infringement involving smartphones. Seventh Circuit Judge Richard Posner, sitting by designation, threw out all damage witnesses for both parties on Daubert motions. Then, since both parties lacked damages testimony, he dismissed both cases with prejudice.
An extraordinary amount of time is incurred in discovery asking for records that may not even exist, or asking for records that do exist, but the other side declines to produce records that were not requested using just the right terms.
The following suggestions result from my experience serving as a witness, watching hundreds of other expert witnesses, and locating witnesses when servings as a confidential consultant. They are intended to help attorneys avoid common mistakes in selecting an expert witness.
Intellectual Property licensing is big business, and is getting bigger. But most licensors do not earn as much as they should because they fail to perform royalty audits allowed under their license agreements.
In many respects, the cross-examination of an expert witness is the same as for other witnesses. Some basics include: Be brief…Do not quarrel with the witness…Never ask a question to which you do not already know the answer…Avoid one question too many…and so on. However, there are some important differences
If you want to improve your chances of success, commit these ideas to stone. Then follow them religiously.1. Keep it simple This is the greatest commandment, and the one most frequently violated. Too much information in a visual aid will confuse rather than clarify. Creativity does not mean complication. To achieve your goal, invoke the following guidelines
Computers contain evidence useful in many human resource circumstances. Allegations of discrimination, sexual harassment, and unfair discharge are serious threats that are better understood by knowing what an employee did. Since computers are such a pervasive part of most employees' work lives, analysis of data stored on these computers helps address these issues
As a forensic accountant and testifying expert in the areas of Fraud, Business Valuation, and Economic Damages, Ted Phelps excels in following the money – no matter where the trail leads.
During his four decades as a financial problem solver, Phelps has built a reputation for integrity, diligence, and leadership. He has testified as an expert witness in both federal and state courts. When working as a court-appointed neutral, he assists the court in carrying out its orders, performs forensic investigations, and reports his findings.
His testimony has been critical to the outcome of many significant cases. For example, Phelps was instrumental in a fraud/forensic investigation that led to a verdict of $21,000,000. He also performed a court-ordered forensic study involving a 14-year reconstruction of books and records on eight single asset real estate entities, conclusively proving that plaintiff's allegations of fraud were false.
Phelps is skilled in the fields of insolvency, reorganization, and restructuring. As a court-appointed fiduciary, he has completed dozens of business receiverships, many of which involved fraud and shareholder oppression issues.
As the founder and president of FVLS Consultancy, Phelps developed and taught a forensic accounting course at California State University, Los Angeles. He currently teaches classes in Accounting and Fraud Investigation at Whitworth University in Spokane, Wash.
Phelps earned his M.B.A. from Whitworth University and his B.S. in Accounting from the University of Southern California, Marshall School of Business. He also studied Engineering at the United States Naval Academy. He is a member of the Association of Certified Fraud Examiners and the National Association of Certified Valuation Analysts.
One of the industry's leading law firm services experts, Michael J. Garibaldi, CPA, ABV, CFF, CGMA, has a strong background providing efficient and affordable solutions to the many complex issues facing the legal profession today.
A Certified Public Accountant licensed by the State of New York, Mr. Garibaldi is Accredited in Business Valuation (ABV), and Certified in Financial Forensics (CFF) by the American Institute of Certified Public Accountants (AICPA). He is recognized as a Chartered Global Management Accountant by the Association of International Certified Professional Accountants.
Mr. Garibaldi works closely with law firms and other professional service firms, manufacturing, wholesale/retail, medical, technology, restaurant/hospitality, artists and galleries, construction, and real estate clients where he is responsible for providing accounting, tax planning management consulting services, and financial reporting.
Mr. Garibaldi provides valuation and litigation support services, assisting attorneys and their clients with the financial aspects of a case throughout the litigation process, from contemplation of action through expert witness testimony. He brings an in-depth understanding of the business and technical aspects of valuation, finance and accounting that is required in complex litigation and arbitration cases.
Mr. Garibaldi qualifies as an expert in valuation matters in the Supreme Courts of New York, Nassau, Suffolk, Kings, Richmond, Monmouth, Orange, and Westchester Counties, and has been called upon by the courts to serve as a neutral Expert. As an instructor of the AICPA Certificate of Educational Achievement Program in Business Valuation, Mr. Garibaldi teaches his specialty to other professionals.
Michael Garibaldi is a Candidate Member of the American Society of Appraisers (ASA), Member of the Institute of Business Appraisers (IBA), the Association of Certified Fraud Examiners, the American Society of Appraisers (ASA), the AICPA and the NYSSCPA. He is a past President and former member of the Board of Directors of the NYSSCPA Nassau Chapter, and has held a variety of positions on the Litigation Support Committee of the Nassau County and State Chapters of the NYSSCPA. Mr. Garibaldi has also held a number of positions on other committees and sub-committees within these organizations.
Most lawyers know how big a problem occupational fraud is in corporate America. They may even count as clients companies that have been defrauded and suffered significant losses. Yet a "not at my firm" attitude persists among many partners who take for granted the honesty and integrity of their colleagues and staff.
When a dishonest CFO or controller cooks the books, it can be devastating for the victim organization. In addition to direct financial losses, financial statement frauds erode trust between management and other stakeholders, including lenders, investors and employees who own company stock. Unfortunately, it's common for smaller companies to associate financial misstatement with large public companies that focus heavily on earnings per share.
It may be detrimental to an expert witness's credibility if even the appearance of a lack of independence exists. In today's legal environment, discrediting an expert based on his or her relationship with counsel, the client or the judge is common. Let's examine how to identify an expert's independence.
There are many more purposes for which valuations are used. Each has its unique presumptions. It must be understood that there is no one value and that the same investment can have a different value to different people and for different reasons. Each valuator must analyze such differences, understand the presumptions inherent in the purpose for which the valuation is to be used, and select and implement a method to determine proper value for the purpose.
When a client voiced strong suspicions that her soon-to-be ex-husband was hiding assets, her attorney investigated the claim but found nothing amiss. However, he hired a forensic accounting expert to help ensure his client would receive an equitable share of the marital estate. The expert turned up a trunkload of hidden treasure - undeclared cash income and property "stashed" under the names of the husband's mother and siblings.
Goodwill can be a significant asset for a professional practice. It may include both "personal" goodwill that's attributable to individual owners and "business" goodwill that can be transferred to third parties. When accountants and other types of professionals divorce, the amount of goodwill to include in the marital estate can become contentious (and may vary depending on state law). If expert testimony on the issue is inadequate, a court might look elsewhere for help, as it did in a recent Texas divorce case, Hill v. Hill.
Michael D. Pakter CPA, CFF, CGMA, CFE, CVA, MAFF, CA, CIRA, CDBV focuses on accounting, forensic accounting, financial analysis, financial forensics, economic damages, business valuation and investigations. He has experience in lost profits / earnings, business interruption claims, analysis of financial transactions and balances, Court-ordered accounting, bankruptcy, fraud examinations, investigations and the reconstruction of incomplete, misstated and/or falsified financial information.
Litigation Support - Mr. Pakter provides consulting and litigation support services to trial lawyers, trustees, examiners, receivers, business owners and managers and units of federal, state and local government. Many engagements combine financial analysis, economic damages determination, valuation issues, tracing procedures and/or other applications of Financial Forensics to assist in resolving complex commercial litigation and business disputes.
Experience - Mr. Pakter has more than 40 years of experience in forensic accounting, investigations and litigation services in numerous industries and diverse engagements, including more than 20 years of experience in economic damages and business valuations. State, Federal and Bankruptcy Courts, as well as arbitrators, have recognized me as an expert in forensic accounting, economic damages, business valuation, CPA malpractice and bankruptcy core proceedings. Mr. Pakter is a Certified Public Accountant with multiple additional certifications in economic damages, financial forensics, business valuation and bankruptcy core proceedings. He focusses his professional practice on forensic accounting, lost profits, lost earnings and other economic damages, business interruption, fraud/financial investigations, bankruptcy core proceedings and litigation support.
The purpose of this article is to introduce the reader to the new Revenue Recognition Accounting Standard (the Standard) issued jointly by the U.S. Financial Accounting Standards Board (FASB) and the UK-based International Accounting Standards Board (IASB) and to consider the Standard’s impact on financial analyses prepared by practitioners performing business valuatio
The choice and use of an ex-ante or ex-post analysis can lead to divergent results in protracted litigation. The article provides an illustration of how and why the results may differ. Litigation consultants are advised to consider the above and await instruction from legal counsel regarding the approach that needs to be taken.
The purpose of this article - the third of three (Part I and Part II) on this topic - is to provide the reader with an understanding Chapter 3 (What Constitutes Best Evidence) of the 2018 Practice Aid as well as certain other publications containing a body of knowledge on the best evidence to support economic damages in a court of law
In this second article on AIRA Standards, the author discusses unique issues valuing distressed companies. These include the standard of value used, the premise of value, the intended use of the valuation, and cost of capital.
It is essential that creditors, managers, and shareholders - as well as the attorneys who advise them - timely identify and respond to signs of a company’s financial distress. Financial distress, according to Investopedia, “is a condition in which a company or individual cannot generate revenue or income because it is unable to meet or cannot pay its financial obligations
The purpose of this article—the second of three on this topic—is to provide the reader with an understanding of Chapter 2 (Costs) of the 2018 Practice Aid as well as certain other publications containing a body of knowledge on the best practices for developing “avoided or saved costs,” sometimes referred to by the courts as incremental costs.
The AICPA has issued two practice aids, one on 2015 and most recently in November 2018, focused on the calculation of economic profits and damages. The purpose of this article—the first of three on this topic—is to provide the reader with an understanding of Chapter 1...
This is Part 2 of a two-part article. The first part (published in the January 2014 issue of Business Valuation Update) discussed valuations of distressed debtor companies based on discounted cash flows and considered the impact of the date and stage of distress. This part describes how the financial analyst derives the cost of capital for a distressed debtor company.
This is Part 1 of a two-part article. This part discusses valuations of distressed debtor companies based on discounted cash flows and considers the impact of the date and stage of distress. Next month, Part 2 will describe how the financial analyst derives the cost of capital for a distressed debtor company.
Financial experts are frequently asked aboutthe tax impact of damage awards, both paidand received. The complexities of the InternalRevenue Code (IRC) and judicial interpretations thereofmake determining the taxability of receipts or payments difficult.The same is true when dealing with the taxability of economic damages awarded to plaintiffs in civil actions. Nuances in the IRC and the judicial interpretations may make it difficult for a taxpayer to determine the taxability of his or her proceeds from a litigation award of personal economic damages. Whether or not such is taxable often depends on how the award of economic damages is categorized and/or described in the awarding documents.
Mr. Bad Actor is a 61–year-old male who is the senior executive of the Unlucky Transportation Company. He has been in that position for more than ten years. Before his employment at the company, he worked for a series of unsuccessful transportation companies, where both he and other stakeholders lost most of their investment. He has ongoing legal and financial problems resulting from these prior business failures and from his failed marriage.
Robert Bates, JD, CPA, CFE, CVA, has over 30 years of Financial Management and Accounting experience as a Controller and CFO in various industries. He has been in several industries, including telecom, media, retail and financial services in addition to having consulting experience at startups in the software, technology, and life sciences fields.
Mr. Bates specializes in International Accounting, Software Issues, and Obtaining Financing. The CFO of a public company, he has completed due diligence accounting/reporting for 12 acquisitions, including performing Business Valuations and dealing with FAS 142 issues. Mr. Bates has handled accounting for complex debt instruments including warrants, beneficial conversion feature, and other derivative issues. He has also been responsible for SEC reporting: 10Q’s and 10K’s.
Litigation Support - Robert Bates has worked with dozens of lawyers on over 50 cases in various states. Sometimes he provides financial support for a client in litigation, or pre-litigation, and other times he provides a report, such as a damages calculation, which can be used in litigation. He also has experience providing testimony in depositions and trials.
Economic downturns and recessions are notorious for encouraging fraud. As new and prospective fraud examiners, it's imperative that you become aware of the various fraud risks that can occur and the red flags that indicate a fraud in progress.
Huggins Actuarial Services, Inc is a full-service independent consulting firm with more than 100 years of experience providing innovative and clever solutions to a wide range of Actuarial and Risk Management challenges. They offer a wide range of tactical consulting services providing valuable assistance in the day-to-day operation of your firm, as well as strategic consulting to inform decision-making on matters of extreme gravity.
Litigation Support - Huggins’ credentialed actuaries have extensive industry experience providing expert witness testimony as part of legal proceedings or for valuation services. Their actuaries are renowned industry experts, providing credible unbiased advice to the client. An actuary providing expert testimony performs an important service to the forum, the finder of fact in the forum, and the public by providing information that can be critical to resolution of disputes. This may include explaining complex technical concepts so they can be understood by the audience to whom the testimony is directed.
Clients are usually a law firm, insurance entity, or an individual person. Huggins undertakes insurance and reinsurance litigation and arbitration support projects and provides assistance as the client may request, and will generally consult with, advise and assist the client. Huggins’ expert actuaries work with the client to evaluate the strengths and weaknesses of the case in order to formulate the best possible strategy. Clients typically request the following services:
Areas of Expertise:
Lawsuit, Arbitration, Deposition Support
Actuarial Malpractice Support
Actuarial Work Product Review
Collateral Negotiations / Disputes Claims
Ronald T. (Rusty) Kuehn, FCAS, MAAA, CERA, CPCU, ARM, FCA, is a Consulting Actuary with Huggins Actuarial Services, Inc. and a Fellow of the Casualty Actuarial Society and the Conference of Actuaries in Public Practice, a Member of the American Academy of Actuaries and the International Actuarial Association. In addition, Mr. Kuehn holds the Chartered Enterprise Risk Analyst (CERA) designation, the Chartered Property-Casualty Underwriter (CPCU) designation, and the Associate in Risk Management (ARM) designation.
Mr. Kuehn is professionally active; he has served as the chairman of the Casualty Loss Reserve Seminar (CLRS), which is jointly sponsored by the Casualty Actuarial Society (CAS), the American Academy of Actuaries and the Conference of Consulting Actuaries. He has also served on the on the Casualty Practice Council of the American Academy of Actuaries, the CAS Examination Committee and Committee for Consultants’ Interests, and as past President, Education Chairman and Board Member of the Casualty Actuaries of the Mid-Atlantic Region (CAMAR).
In addition, Mr. Kuehn has served on the Insurance Services Office Private Passenger Automobile Subcommittee and the Homeowners Subcommittee. Mr. Kuehn has also served as a Member of the Conference Task Force on Public Policy Debate of the Conference of Actuaries in Public Practice. He currently serves on the Board of the Insurance Society of Philadelphia (ISOP), and he is a member of the ORSA subgroup of the ERM Committee of the Risk Management and Financial Reporting Council of the American Academy of Actuaries. His over 45 years in business have given him a thorough knowledge of the property-casualty business both from a company and consulting viewpoint.See Full Bio and Consulting Experience.
Grover M. Edie, MBA, FCAS, MAAA, CERA, CPCU, ARM, ARP,is a Fellow of the Casualty Actuarial Society, a Member of the American Academy of Actuaries, a Certified Enterprise Risk Analyst, a Chartered Property Casualty Underwriter, an Associate in Risk Management, and an Associate in Research and Planning.
Prior to joining Huggins, Mr. Edie was Vice President and Chief Actuary at GMAC Insurance Company, where he oversaw all actuarial activities including pricing, loss reserving, and enterprise risk management in personal auto, commercial lines, auto extended service contracts, assumed reinsurance and other miscellaneous lines of insurance. He introduced Economic Capital Modeling to the organization during his tenure. His previous employers include Erie Insurance Group, John Deer Insurance, and the Insurance Services Office.
Mr. Edie has over 25 years of actuarial experience. He started his insurance career as an underwriter. The primary services Mr. Edie provides to his clients includes Economic Capital Modeling, Enterprise Risk Management, profitability analysis, rate level reviews and filings, and loss reserve analysis. See Full Bio and Consulting Experience.
Kim E. Piersol, FCAS, MAAA, is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. Prior to joining Huggins, he served as Senior Vice President & Chief Actuary for Crum & Forster Insurance Companies. Prior to that he served as Group Vice President & Chief Actuary for CNA Insurance Companies, and was a consulting actuary for KPMG LLP, Arthur Andersen LLP, and CFO of AIG Risk Management (AIGRM).
Mr. Piersol is professionally active; he has served on the American Academy of Actuaries Environmental Liabilities Work Group, the NAIC Technical Advisory Committee on Catastrophe Reserves, the Workers’ Compensation Reinsurance Bureau Actuarial Committee, and has been a Director and Treasurer of the Professional Liability Underwriting Society (PLUS). He also served on the Professional Liability Actuarial Subcommittee of the Insurance Services Office (ISO). He has also served as a 1st Lieutenant in the United States Army Field Artillery. His over 40 years in the actuarial field have given him a thorough knowledge of the property-casualty business both from a company and consulting viewpoint.See Full Bio and Consulting Experience.
EJ Janik, CPA, CFF, CFE is a Certified Public Accountant with 40 years of professional experience. He specializes in financial audits, compilations and reviews, consulting for commercial litigation, antitrust matters, engineering and construction matters, real estate, and bankruptcy / business reorganizations matters. Mr. Janik holds a Master of Science in Accounting from Louisiana State University and a Bachelor of Commerce from Rice University. He is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants. Mr. Janik has provided over 150 financial audits and consulted in over 765 business disputes. He has provided expert testimony in over 88 matters including trial testimony in 58 trials or hearings in 8 states. Mr. Janik's accounting services include Damages/Lost Profit analysis, Forensic Accounting, Fraud Investigations, Fact Finding, Financial Analysis, and Expert Witness Testimony when necessary. Litigation Experience:
Debt & Capital Analyses
Mergers & Acquisitions
Royalties, Commissions, Income
White Collar Crimes
Mr. Janik is also uniquely qualified to measure construction claims and damages. With over 11 years of construction experience, he has accumulated over 13,000 Engineering and Construction (E&C) auditing hours, 10,000 E&C consulting hours, and 15,000 E&C supervised hours. Construction Claims Services include: