Services
M&A Disputes and Neutral Expert/Arbitration
Many M&A transactions provide financial closing targets such as a stated amount of net working capital, definitions and amounts for debt and debt-like items, and/or additional purchase price provisions or earnouts based on attaining financial targets such as net revenues or EBITDA. Understanding the mechanics underlying these provisions is critical to ensuring the appropriate resolution associated with these metrics.
We’ve worked on hundreds of transactions and whether serving as a consultant, expert, or third-party neutral/arbitrator, leverage our deep qualifications with basic and complex accounting issues, as well as our experience as TAS leaders, and in the “field,” providing up-front financial due diligence and deal agreement structuring, to every engagement.
Prior Experience
- Expert on behalf of selling stockholders of Harmonix Music Systems, developers of the Rock Band and Guitar Hero video games, in connection with their multi-year earn-out dispute with Viacom.
- Represented buyer in connection with the acquisition of a multibillion-dollar global engineering/construction business that was “carved out” from its parent. Subsequent to closing, identified factors indicating that either a material adverse change had occurred or that audited financial statements and other information provided to buyer in connection with its due diligence, was materially incorrect and misleading. Client obtained $350 million reduction of purchase price.
- Neutral accounting arbitrator on more than seventy matters in the technology/internet, manufacturing, construction/contracting, banking, pharmaceutical/life sciences, financial services, and automotive industries regarding determination of net working capital and earn-outs in accordance with GAAP and contract provisions. Disputed items included, but were not limited to, document production and appropriate balances for receivables, inventory, investments, other assets, accrued and contingent liabilities, benefit plan liabilities, revenues, cost of goods sold, expenses, deferred taxes and consideration of events subsequent to closing.
Forensic Accounting and Financial Investigations
BFA has led a wide spectrum of forensic accounting and fraud investigations. These have included management requested engagements, regulatory investigations, response to whistleblower allegations, and alleged fraud/Ponzi schemes. We have also assisted legal counsel and clients in addressing regulatory inquiries regarding the appropriateness of accounting and financial reporting, as well as on behalf of governmental entities. Our experience includes cross-border and multilocation entities and investigations pursuant to the Foreign Corrupt Practices Act.
We have also worked on behalf of professional athletes, entertainers, and ultra-high net worth families, and understand the unique sources of income and expenses associated with financial reviews for these clients.
Prior Experience
- Fraud investigation at the U.S. subsidiary of a Japanese global electronics manufacturer involving the misappropriation of funds by the director of benefits.
- Internal accounting investigation of a publicly traded pharmaceutical company regarding revenue recognition and related sales deductions, asset impairments, arrangements with business partners and discontinued operations. Subsequently retained to assist with the multi-year restatement of the company’s financial statements.
- Internal investigation of a publicly traded manufacturer of technology-related equipment regarding appropriateness of revenue recognition and sales cutoff.
- Led a team comprised of U.S. and foreign-based professionals in connection with an investigation of an international hospitality entity regarding fraud perpetrated by the controller and certain accounting personnel.
- Investigation into a technology company’s revenue recognition practices involving its Chief Financial Officer and VP Sales. Allegations of bill and hold and “side agreements” used to improperly overstate sales and achieve targeted bonuses.
- Managed team in connection with the forensic accounting investigation and analysis of Bernard L. Madoff Investment Securities.
- Let internal investigation at a Fortune 500 company in regards to multiple whistleblower allegations regarding the appropriateness of numerous accounting and financial reporting practices.
- Forensic/financial reviews for professional athletes, entertainers, and Ultra/High Net Worth individuals and families.
Accounting, Auditing, Professional Liability, Financial Reporting
When concerns arise regarding the quality of an accountant’s work (i.e., audit and review services) or the appropriateness of an entity’s accounting and financial reporting, we are ready and prepared to step in. BFA has decades of experience analyzing and applying Generally Accepted Auditing Standards, Generally Accepted Accounting Principles, as well as with external financial statement audits and reviews as an audit partner, external and internal firm “peer” reviewer, and expert consultant.
We have served as consultants and experts when assessing an entity’s financial reporting, as well as the actions of management and other individuals responsible for determining the accounting and disclosures for transactions. We are experienced with assessing internal controls and allegations of alleged accounting improprieties.
Prior Experience
- Expert in connection with two accounting firms accused of failing to properly follow GAAS in connection with their audit work in the areas of income taxes, inventory and accrued liabilities.
- Investigation regarding the appropriateness of accounting for numerous transactions of an international entertainment production company.
- Consulting expert representing an accounting firm in connection with allegations of its audit client’s improper accounting for and disclosure of subsequent events.
- Testifying expert in connection with the defense of a former executive of a multinational internet advertising firm accused by the SEC of improper revenue recognition and overstatement of earnings.
- Expert in connection with the defense of a former senior officer of a multinational real estate development company in connection with SEC Enforcement action. Allegations included intentional misapplication of GAAP related to accounting for joint venture and equity investments, reserves, compensation arrangements, pre-operating costs and others. Contributed to Wells Submission and client’s dismissal.
- Expert on behalf of an accounting firm accused of failing to identify an $80 million fraud which led to its client’s bankruptcy.
- Served as an expert and/or consultant for the Securities and Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB), Department of Justice (DOJ), and Department of Labor (DOL).
Commercial Disputes and Litigation
When commercial disputes arise from disagreements over contract terms, alleged breach of contract provisions, or other reasons, attorneys and their clients often look to experts who can assess, analyze, and quantify potential financial and economics damages associated with such claims. This often requires developing financial models to support facts, circumstances and assumptions, related to matter.
BFA has significant experience determining and rebutting lost profits and damages associated with breach of contract and other commercial disputes and litigation claims.
Prior Experience
- Expert on behalf of a global chemical manufacturer in connection with damages associated with a supplier’s termination and breach of contract.
- Expert on behalf of a manufacturer and supplier of automotive parts in connection with breach of contract matter and associated damages.
- Expert on behalf of a former investment fund co-founder in connection with damages associated with various incentive and management fees arrangements.
- Expert on behalf of an individual regarding investments made into an entity purportedly misappropriating assets and conducting a Ponzi scheme.
M&A Buy and Sell Side Financial Due Diligence
We are retained by buyers, sellers and their advisors…PE firms, investment bankers, independent sponsors, emerging growth entities, and others….in connection with buy and sell side financial due diligence. BFA and its affiliates have been involved with hundreds of buy and sell side financial due diligence engagements, and are adept at quickly identifying potential issues as well as working to negotiate areas of concern, into solutions. Depending on the nature of a particular transaction and our client’s needs, we can provide a summary of observations, Quality of Earnings (“QoE” and “QoE Light,”), up through providing a thorough and comprehensive report that might need to be shared with lenders and other third parties.
Prior Experience
- Directed the preparation and analysis of working capital and financial valuation models including validity, appropriateness of accounting, quality of assumptions, seasonality/cyclicality, foreign currency effects, and expected synergies.
- Spearheaded team that identified financial exposures in a company’s aircraft lease portfolio, contributing to the reduction of purchase price by $200 million.
- Assisted clients with the review of, as well as preparation of, QoE databook, offering memoranda, financial information, and data room materials in connection with buy and sell side advisory work.
Phone
Address
51 JFK Parkway, Suite First Floor West, Short Hills, NJ 07078