Financial Opinions & Dispute Resolution
 
With an in-depth understanding of the Life Sciences & Healthcare industries, strong credibility among Wall Street institutions, extensive financial opinion experience in 600 engagements completed since 2003, representing $50 billion plus in value, and complete independence and objectivity by virtue of no inherent conflicts, The Salter Group is well positioned to provide the following Transaction, Financial and Tax Oriented Opinions:
 

Transaction Based Opinions
 
Fairness Opinions

Fairness Opinions

Under Sarbanes-Oxley, judicious corporate directors, independent committees, investors, investment banks and other parties require experienced, un-conflicted financial advisors with Wall Street credibility to assist in meeting their fiduciary obligations.

The Salter Group provides independent fairness opinions that withstand the most rigorous board room requirements and Wall Street scrutiny through comprehensive analyses which incorporate a disciplined assessment of value and transaction structure, while giving consideration to practical transaction alternatives.

Through these efforts, The Salter Group enables an array of fiduciaries to fulfill their responsibilities to shareholders by making informed, timely and cost effective decisions. Underlying our financial opinions stands thorough documentation of market conditions, competitive position, operating cost, capital markets, security-design and other related analyses.

The Salter Group’s global reputation for integrity, independence and industry expertise, has enabled the firm to quickly distinguish itself as a preeminent provider of financial opinions of all kinds.

The Salter Group provides fairness opinions in connection with a variety of transactions, such as:

• Mergers, acquisitions and divestitures
• Going-private transactions
• Leveraged buyouts
• Recapitalizations and restructurings
• Licensing agreements
• Unique compensation agreements

Solvency Opinions

Solvency and other Capital Adequacy Opinions

“Fraudulent conveyance” and “fraudulent asset transfer” represent significant risks to board directors, secured lenders, shareholders, cash and share equity recipients, investment banks and related parties in leveraged transactions, equity distributions, stock redemptions and other related transactions.

The Salter Group provides solvency opinions that determine whether (i) the fair value and orderly liquidation value of a business’ assets exceed a business’ stated liabilities and identified contingent liabilities; (ii) a business can pay its debts as they arise; and (iii) the capital remaining in a business after a transaction would not be unreasonably small for the business in which the company is engaged, as management indicates it has been conducted and is proposed to be conducted following the transaction.

With extensive financial opinion experience in over 1,800 financial advisory assignments representing over $75 billion in value, strong credibility among Wall Street’s leading institutions, and complete independence and objectivity by virtue of no inherent conflicts, The Salter Group possesses strong credibility as a solvency opinion provider on behalf of boards of directors, commercial banks, private equity and hedge funds and investment banks.

Collateral Valuation Opinions

Collateral Valuation Opinions

The Salter Group is a preeminent global provider of collateral valuation opinions for the entertainment & media industries, the life science and health care industries, telecom and media-technologies industries, and diversified industrial companies ranging from energy and waste management to transportation services, textiles and consumer goods and services.

Increasingly, institutional lenders such as commercial banks, private-equity funds and hedge funds require credible independent valuation opinions and advice to provide support for prospective credit facilities, particularly in industries with concentrations in intellectual property (“IP”).

As institutional lenders rely substantially on the integrity of collateral valuations, a high level of due diligence is required to enable lenders to believe (i) that forecasted cash flows can pay interest-bearing debt-obligations as they mature and (ii) that the saleable value of the collateral meets or exceeds the amounts owing as part of an orderly liquidation process.

Having pioneered the development of forecast and valuation methods in areas involving complex IP rights and securities for entertainment and media IP; life-science IP for specialty pharmaceutical, biotechnology, medical devices and related technologies; and telecommunications and new-media technologies. The Salter Group has established outstanding credibility among many of the world’s leading institutional lenders for our integrity in the accuracy, thoroughness, industry expertise and practical reliability of our analytics and associated collateral valuation support.

With extensive financial opinion experience in over 1,800 financial advisory assignments representing over $75 billion in value, strong credibility among Wall Street institutions, and complete independence and objectivity by virtue of no inherent conflicts, The Salter Group possesses strong credibility as a collateral valuation opinion provider on behalf of capital providers including commercial banks, private equity funds, hedge funds and investment banks; as well as companies in the Entertainment & Media, Life Sciences & Health Care, Telecom and Media-technology and the diversified industries we cover.

Going Concern Valuation Opinions

Financial Reporting Opinions
 
Purchase Price Allocation Opinions – SFAS 141, Sec. 1060 and Sec. 338

Purchase Price Allocations – SFAS 141, Sec. 1060 and Sec. 338

The Salter Group is a prominent provider of Purchase Price Allocation Opinions for transactional purposes under Sec. 1060 and Sec. 338, and for financial reporting purposes under SFAS 141.

Purchase Price Allocations reflect that allocation of value among and between the acquired tangible and intangible assets related to a transaction, and the establishment of the useful lives for each asset. In most cases, The Salter Group facilitates purchase price allocations by (i) independently developing indications of value, (ii) assisting clients in obtaining hard asset appraisals, (iii) allocating these values within the context of the purchase price, and (iv) giving consideration to and incorporating accounting and regulatory standards in association with accounting firms preparing the financial statements.

In most cases the valuation of intangible assets, consideration and incorporation of accounting and regulatory standards, and ability to seamlessly incorporate the work product into the financial statement preparation efforts of accounting firms represent the key strength to facilitate a positive and efficient purchase price allocation and accounting process.

With extensive financial opinion experience in over 1,800 financial advisory assignments involving complex IP valuations in entertainment and media, life sciences and health care, telecom and media-technology, and diversified industries, The Salter Group has distinguished itself as a prominent provider of purchase price allocations reflecting a wide variety of transaction and financial reporting characteristics.

Goodwill and Intangible Asset Impairment - SFAS 142 and 144

Goodwill Impairment

As a leading provider of financial opinions involving intangible assets, The Salter Group is uniquely positioned to assist companies in the determination of Goodwill and Intangible Asset Impairment analyses in conjunction with SFAS 141 and 142.

SFAS 141 and 142 were issued by the FASB in 2001 to facilitate the governance of accounting for business combinations and intangible assets. These rules prohibit the pooling of interests method of accounting and eliminate goodwill amortization. In effect, these rules caused two major changes to goodwill accounting:

• Amortization of all goodwill ceased, regardless of when it originated. As a result, Goodwill is carried as an asset without reduction for periodic amortization.

• Companies are to assess goodwill for impairment at least annually. If goodwill is impaired, its carrying amount is reduced and an impairment loss is recognized.

To test goodwill for impairment, companies must first assign the recorded goodwill to “reporting units.” These could be the company’s operating segments identified under SFAS 131, or a “component” of a reportable operating segment as defined in paragraph 30 of SFAS 142.

In general, companies assign goodwill to each unit by comparing the estimated fair value of the reporting unit as a whole with the fair values of the unit’s identifiable net assets. After the goodwill is assigned, at the next impairment testing point the company applies the following two-step process to each reporting unit:

• Step 1: The company estimates the fair value of the reporting unit and compares it with the unit’s book value, which equals the recorded amounts of assets and allocated goodwill less liabilities. When fair value is greater than book value, there is no impairment, and the test is complete. When fair value is less than book value, goodwill may be impaired, and the company goes to Step 2.

• Step 2: The company estimates the implied fair value of the reporting unit’s goodwill (GFV) by repeating the process performed at acquisition. This requires subtracting estimated current fair values of the unit’s identifiable net assets (INA) from the unit’s estimated fair value (UFV), and comparing the difference with the carrying amount of the goodwill (GBV). When GFV is greater than GBV, goodwill is not impaired and there is no write-off. When GFV is less than GBV, the company must record an impairment write-off equal to the difference.

Impairment losses are not reversible. After the transition period, companies go through the two-step impairment test at least annually, treating reporting units’ impairment losses as charges to “income from continuing operations.” After the transition period, the periodic impairment test is not done on an aggregate or portfolio basis; that is, increases in implied goodwill in some reporting units cannot offset impairments in other units.

With extensive financial opinion experience in over 1,800 financial advisory assignments representing over $75 billion in value, strong credibility among Wall Street institutions, and complete independence and objectivity by virtue of no inherent conflicts, The Salter Group possesses strong capability and credibility in providing Goodwill and Intangible Asset Impairment analyses.

Portfolio Valuations for Equity & Debt Funds

Portfolio Valuations

Regulatory changes and increased investor scrutiny have increased the need among private equity, debt and hedge funds for credible independent valuations of illiquid portfolio pricing.

As a leading provider of risk analyses and valuation services for private equity and hedge funds, The Salter Group possesses the capability, experience, credibility and objectivity to support the growing needs of private equity, debt and hedge fund managers.

The services we offer for private equity, debt and hedge funds include:

• Valuation of portfolio companies or investments in portfolio companies within the fund.

• Valuation of illiquid portfolio investments and loans.

• Assessing or developing independent loss frequency analyses on loans utilizing alternative analytic methods.

• Assessing or developing confidence intervals and return analyses on equity investments utilizing alternative analytic methods.

With extensive financial opinion experience in over 1,800 financial advisory assignments representing over $75 billion in value, strong credibility among Wall Street institutions, and complete independence and objectivity by virtue of no inherent conflicts, The Salter Group possesses strong capability and credibility as a portfolio valuation and risk-analysis opinion provider on behalf of private equity, debt and hedge funds focusing on Entertainment & Media, Life Sciences & Health Care, Telecom and Media-Technology, and diversified industries.

Intellectual Property Valuations

Intellectual Property Valuations

As a pioneer of intellectual property (“IP”) valuation methods ranging from entertainment & media to life sciences & health care, The Salter Group is regarded as a global market leader in providing credible independent IP valuations having completed over 1,800 projects representing over $75 billion in asset values made up almost entirely of IP rights.

The Salter Group values a broad range of IP including the following:

• Contracts – Rights to cash receipts associated with various contracts including licensing rights, trademarks and trade name usage, and related contractual claims.

• Customers – Rights associated with measurable customers levels.

• Technology - Rights to cash receipts associated with various technologies including patents to software and proprietary technologies, trade secrets, software, and related technologies.

The Salter Group has developed a variety of proprietary IP forecast and valuation methods used to develop valuation indications that are heavily relied upon by many accounting firms, Wall Street capital providers, investment banks, and commercial businesses for a wide range of applications including transaction based financial opinions including collateral valuations, fairness opinions, solvency opinions, tax based financial opinions and financial reporting opinions.

Tax Planning and Reporting Opinions
 
Enterprise, minority interest and non-marketable minority interest business and asset valuations

Equity/Share Based Incentives and Compensation For Services - IRS Sec. 409A

Equity Based Incentives and Compensation For Services - IRS Sec. 409A

Non Qualified Deferred Compensation Plans - IRC Sec. 409A

In October 2004, Congress established IRC Section 409A to effectively cause companies to establish defensible valuations of equity used to pay parties providing services to the company.

Since 409A is currently effective, companies should be sure to accurately value their common stock for any new equity award grants. Since the IRS has generally given companies until December 31, 2007 to be in compliance with 409A with respect to past grants, companies should also carefully consider whether past equity award grants were at fair market value before the opportunity to "fix" those grants runs out.

Equity-based compensation, such as nonqualified stock options, stock appreciation rights, stock units and phantom stock are subject to 409A.

The key requirement for a nonqualified stock option or stock appreciation right to be 409A exempt is that it has an exercise price no less than the fair market value of a share of the company's stock on the grant date.

Failure to meet 409A standards triggers immediate tax on the value of the deferred compensation, plus a penalty equal to 20% of the deferred compensation, plus interest at the IRS underpayment rate plus 1% which accrues from the first day of deferral.

Prior to 409A, a company's board of directors could make good faith determinations of fair market value when granting equity-based incentives. Under 409A companies must formally value their common stock for these purposes orface the risk of exposing their employees and themselves to penalties should their estimate be wrong. As such, estimated values based on “rules of thumb” used in venture-capital or private-equity based transactions must be demonstrated to be fair market value.

The Salter Group provides cost-effective Wall Street credible independent valuations that enable compliance with 409A. The Salter Group has distinguished itself as one of the leading independent financial and strategic advisory firms with specialties in economic analysis, transaction support, corporate development and intangible asset valuations. With more than 1,800 engagements representing $75 billion plus in asset values, The Salter Group is uniquely positioned to serve its diverse clients throughout the world.

Incentive compensation, options and "cheap stock" – SFAS 123R

Employee Incentive & Option Valuations – SFAS 123 and 123(R)

All public and non-public companies are required to count stock-based compensation as a cost against earnings in accordance with SFAS 123 and SFAS 123(R) respectively.

In most public and non-public companies, share-based equity incentives to employees are based on fair value as of the grant-date.

For stock options awarded, the standard recommends the use of lattice models as compared with Black-Scholes models because lattice models divide the value into discrete periods with specific values. This approach enables the option to be expensed over several years corresponding to a recipients expected or minimum employment period, vesting schedules or other characteristics.

The Salter Group provides cost-effective, Wall Street credible, independent valuations that enable compliance with standards SFAS 123 and SFAS 123(R) by providing independent objective fair market value opinions covering the enterprise, specific stock-based incentive securities, and the associated expensing of these incentives over applicable time periods. As a leading independent financial and strategic advisor, The Salter Group assists companies, audit committees, company accountants, investment banks and related parties by providing credible independent and objective opinions.

Estate and Gift Tax Opinions

Litigation Support and Dispute Resolutions

Assessment of facts and strategic options
Quantification of damage estimates
Expert witness testimony