When our clients have an international need, we assist them with the international presence of Valuation Research Group (VRG). Whether it has been in support of our valuation of the Panama Canal, tax reporting needs in Brazil, or fixed asset valuations of factories in China, our international reach allows us to provide our multinational clients with a single source for valuation support.
VRG has dozens of offices throughout continental Europe and the United Kingdom, as well as many throughout Brazil, China, Colombia, Japan, India, Mexico, Canada, Argentina, Australia, Singapore, Spain, Portugal, Germany, the UK, and the United States. This global network of over 1,300 professionals provides local market knowledge, in-country tax expertise, cost-effective fixed asset valuations, and local financial and regulatory reporting experience.
Our experience includes foreign and multinational acquisitions of all sizes in nearly every industry. The larger acquisitions have generally encompassed multiple legal entities. Typical engagements in support of acquisitions include:
- The $6 billion acquisition of Rothmans, the second-largest tobacco company in Canada
- The $2 billion acquisition of the largest juice company in Russia by a U.S. multinational
- The $7.8 billion acquisition of the Groupe Danone biscuit business by Kraft Foods
Our valuation of the Panama Canal for the Panama Canal Authority was in support of the $5.25 billion expansion of the canal. Our work included determination of the enterprise value of the canal, and also an appraisal of the fixed assets. With new lock gates up to 180 ft. wide, compared to previous limitations of 110 ft. wide, the project will double the capacity of the canal.
In support of the $7.8 billion acquisition of Groupe Danone’s global biscuit business by Kraft Foods, VRG was engaged to value all of the acquired intangible assets, real property, and machinery and equipment. Groupe Danone’s biscuit business included many leading biscuit brands, such as LU, Tuc, and Prince, and operations and assets in more than 20 countries, including 32 manufacturing facilities.
The acquisition accelerated Kraft’s growth strategy by strengthening its lead in the company’s fastest-growing global segment and significantly expanding its presence and scale in both developed and emerging markets. Kraft is now the world’s leading biscuit company, with a strong portfolio of iconic brands. Biscuits became the company’s largest global business, representing approximately 20 percent of total Kraft revenues. Kraft’s business nearly doubled in China, and the company gained a presence in both Indonesia and Malaysia.
Material fixed assets and major manufacturing plants were located throughout Europe, Africa, China, and Asia. VRC was engaged as the sole valuation firm. We, in turn, brought in our VRG affiliate members from around the world, to lead their in-country valuations of the various assets. In addition to financial reporting under U.S. GAAP, our valuations were also in support of tax reporting.
The client, as is the case with nearly all such large acquisitions, engaged the services of a third-party accounting firm for due diligence support. VRC commonly works alongside these due diligence firms during early project stages, as part of the overall deal team. Our clients have generally—as we do not provide non-valuation due diligence services—determined it best to engage due diligence firms to do what they do best and to engage us for what we do best: the valuation component of any acquisition.
Kraft arranged for a project kick-off week of meetings in Europe, with our professionals and their finance leaders from each of their major geographic regions around the world. These meetings detailed the scope of work, the expectations for support and information from each region, and the schedule—including which plants and other locations were to be inspected on-site. The structure and requirements of each region were also discussed, including how valuations were to be developed for, and by, legal entity. Our US project team also met with Kraft and Groupe Danone managers in other European country locations, to gather information and conduct management interviews.
VRC’s US offices, along with VRG’s offices outside the US provide valuations to support the financial requirements outlined in the International Financial Reporting Standards (IFRS). Since not every country that has adopted IFRS has adopted each new standard, when or as issued, there are intricacies to each country’s reporting requirements. Our professionals, based in respective countries and working with many of the world’s leading multinationals, have the knowledge and experience to assist with each country’s variation of IFRS. We are able to assist from the United States, the US-based subsidiaries, and offices of foreign-based multinationals, with their IFRS needs.
Most commonly our support in this area is pursuant to IFRS 3R, Business Combinations. Also, we are often engaged in support of International Accounting Standard 36 Impairment of Assets (IAS 36), when testing for potential asset impairment, and IFRS 2R, in support of share-based compensation.
Multinational support for tax reporting needs is commonly provided by our US offices. Frequently, this involves the valuation of non-US legal entities, including foreign holdco’s, IP holdco’s and operating entities in support of tax restructuring. In addition, we value IP for transfer from one tax jurisdiction to another.
More Perspectives: International Valuation Issues
Valuation Issues in Australia
Australian financial reporting is based on IFRS. The Australian Accounting Standards Board (AASB) has issued AASB standards mirroring IVS with a few very minor changes.
Valuation Issues in Canada
In Canada, expert valuation analysis and reports contribute to the resolution of legal and financial disputes, matters before arbitration boards, securities commissions, and other regulatory bodies.
Valuation Issues in Japan
Multinational firms considering mergers, acquisitions, or divestitures in Japan will require sound valuation analysis and advice from a firm that is fully immersed in JGAAP and IFRS financial reporting standards.
Valuation Issues in the UK and Europe
When acquiring a business with operations in multiple countries it may be necessary to value the entities by country in order to determine their tax basis as well as the appropriate level of deferred taxes.
Transaction-Related Valuation Issues
The deal teams at multi-national firms need valuations more than ever because every M&A transaction faces financial or tax reporting issues throughout the deal process.
International Business Combinations
The continued globalization of business drives an undeniable need for independent valuations delivered by a firm offering local experts and global reach.