Asset valuation in billion-dollar joint venture

Asset valuation in billion-dollar joint venture

Multi-disciplinary Valuation - Financial Reporting Purposes

Stout was engaged by two U.S.-based public companies to estimate the fair value of certain assets held by, and the noncontrolling interests in, a new joint venture established by the companies.

The joint venture is composed of two entities, and the transaction featured the contribution of next-generation designs and related assets for medium- and heavy-duty automated transmissions by one partner. In exchange for a 50% economic interest in the joint venture, the second partner paid $600 million to the first partner. When including initial and future cash contributions to be made to the joint venture by each of the partners, the total invested capital in the transaction was $1.28 billion. In the first phase of the engagement, we determined the fair value of the joint venture’s two operating legal entities as well as the noncontrolling interests therein. The second phase of the engagement involved determining the fair value of the joint venture’s personal property as well as its technology and customer-related intangible assets. Additionally, the scope of the engagement involved the review of certain agreements entered into as part of the transaction in order to assess whether any favorable or unfavorable positions may exist. Because the joint venture’s two operating legal entities were domiciled in the U.S. and Switzerland, our analysis incorporated tax law considerations for both countries in terms of projected taxes and applicable intangible asset amortization.

Our work was used by the noncontrolling interest partner to satisfy equity method investment accounting requirements, while the controlling interest partner utilized our work to assist with purchase accounting and tax reporting. Both portions of the analysis underwent review by the partners’ external auditors, for which we provided responses to several rounds of audit review questions and held direct conversations with the audit teams.

Zugehörige Experten

Alle zugehörigen Experten