Focus Financial Partners Inc Transaction Details Merger Acquisition
.rtf
keyboard_arrow_up
School
New York University *
*We aren’t endorsed by this school
Course
MISC
Subject
Finance
Date
Jan 9, 2024
Type
rtf
Pages
13
Uploaded by CaptainHyenaPerson1037 on coursehero.com
Focus Financial Partners Inc. > Transaction Details > Merger/Acquisition
Merger/Acquisition
Currency: Reported Currency
Deal Summary
Status
Closed
Primary Transaction Feature
Acquisition of Equity Stake
Announced Date
Nov-03-2022
Bid Made Date
Nov-01-2022
Letter of Intent Date
-
Effective Date
-
Definitive Agreement Date
Feb-27-2023
Closed Date
Aug-31-2023
CIQ Transaction ID
IQTR1824482328
Cancelled Date
-
Sell-side Participants Company Name:
Focus Financial Partners Inc.
Primary Industry:
Asset Management and Custody Banks
Headquarters:
United States
Buy-side Participants
Buyer Company:
Clayton, Dubilier & Rice, LLC; Stone Point Capital LLC
Deal Values
Total Consideration to Shareholders ($ mm)
4,135.29
Total Transaction Size ($ mm)
4,164.58
Implied Equity Value ($ mm)
4,135.29
Implied Enterprise Value ($ mm)
-
Implied Enterprise Value/LTM Revenue
-
Implied Enterprise Value/NTM Revenue
-
Implied Enterprise Value/LTM EBITDA
-
Implied Enterprise Value/NTM EBITDA
-
Implied Enterprise Value/LTM EBIT
-
Implied Enterprise Value/NTM EBIT
-
Implied Equity Value/LTM Net Income
41.8x
Offer Price/NTM Earnings
-
Implied Equity Value/Book Value
3.9x
Offer Price/Forward Book Value
-
Synopsis
Comments
Clayton, Dubilier & Rice, LLC (CD&R) and a fund managed by Stone Point Capital LLC made a non-binding offer to acquire Focus Financial Partners Inc. (NasdaqGS:FOCS) from a group of shareholders for $4.1 billion on November 1, 2022. Clayton, Dubilier & Rice, LLC and a fund managed by Stone Point Capital LLC entered into a definitive agreement to acquire Focus Financial Partners Inc. from a group of shareholders on February 27, 2023. CD&R made an offer to acquire Focus Financial Partners Inc. for $53 per share in cash. Funds managed by Stone Point Capital LLC are considering retaining a portion of their investment in Focus and providing new equity financing as part of the proposed transaction, subject to negotiation with CD&R of definitive agreements on mutually agreeable terms. Focus will cease to be a publicly traded company if such a transaction is
consummated. CD&R has also proposed that the transaction would be subject to a non-waivable approval of a majority of the voting power of disinterested shareholders. CD&R and Stone Point intend to finance the transaction with fully committed equity financing that is not subject to any financing condition. In case of termination, FOCS must pay to buyers a termination fee of $150.35 million.
The transaction is subject to the completion of due diligence, the negotiation of definitive agreements, Board and Focus’ stockholder approval, customary client and regulatory approvals, the HSR Act shall have expired or been terminated and other customary conditions. A Special Committee of the Board of Directors of Focus to evaluate a non-binding offer received from CD&R and to explore alternative transactions. As of February 2, 2023,
after a series of negotiations with CD&R and outreach and meetings with other potential bidders, the Special Committee has approved the exclusivity agreement based on CD&R meeting the Special Committee’s requirement of $53 per share. As of February 27, 2023, the special committee of the Board of Directors of Focus has unanimously approved the transaction. The Board of Directors of the buyer have also unanimously approved the transaction. The 40-day go-shop period expired on April 8, 2023. Focus did not receive any alternative acquisition proposals from any third party during the go-shop period. As of June 15, 2023, the transaction has been approved by European Commission. As on July 14, 2023, shareholders of Focus Financial Partners Inc. have approved the transaction. The transaction is expected to close in the third quarter of 2023.
Jefferies LLC and Goldman Sachs & Co. LLC acted as financial advisors and Potter Anderson & Corroon LLP acted as legal counsel to the Special Committee of Focus. Stancell Haigwood, David Peck, Lina Dimachkieh, Allyson Seger, David D’Alessandro, Patricia Adams and Regina Ibarra of Vinson & Elkins LLP acted as legal counsel to Focus. Moelis & Company LLC, RBC Capital Markets, Truist Securities, Inc., BofA Securities, BMO Capital Markets, Citizens Capital Markets, Inc., Fifth Third Securities, and MUFG acted as financial advisors to CD&R and Stone Point. Richard J. Campbell, P.C., David M. Klein, P.C., Rachael G. Coffey, P.C., Kyle P. Elder, Kevin W. Mausert, P.C., Justin L. Joffe and Jimin He of Kirkland & Ellis LLP acted as legal counsel to CD&R on the transaction. Elizabeth Cooper, Mark Viera, Benjamin Rippeon, William Smolinski, David Rubinsky, Jamin Koslowe, Kenneth Wallach, Adam Shapiro, Catherine Burns, David Blass, Meredith Abrams, Steve DeLott, Spencer Sloan and Jessica Cohen of Simpson Thacher & Bartlett LLP acted as legal counsel to Stone Point. Ryan Rafferty, Jeffrey Ross, Steven Slutzky, Jason Auerbach of Debevoise & Date Created: Dec-14-2023
Page 1 of 13
Focus Financial Partners Inc. > Transaction Details > Merger/Acquisition
Deal Resolution
Clayton, Dubilier & Rice, LLC (CD&R) and a fund managed by Stone Point Capital LLC completed the acquisition of Focus Financial Partners Inc. (NasdaqGS:FOCS) from a group of shareholders on August 31, 2023. With the completion of the transaction, Focus's common stock has ceased trading and is no longer listed on NASDAQ. The Mergers were funded in part with proceeds from a senior secured incremental B-6 term loan facility in
an aggregate principal amount of $500.0 million.
Advisors
Advisor Name
Client Name
Role
Fee($)
Fee Percentage (%)
BMO Capital Markets Corp.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
BofA Securities, Inc.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
Citizens Capital Markets, Inc.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
Fifth Third Securities Inc.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
Moelis & Company LLC
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
MUFG Securities Americas Inc.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
RBC Capital Markets, LLC
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
Truist Securities, Inc.
Clayton, Dubilier & Rice, LLC
Financial Advisor
-
-
Bär & Karrer Ltd.
Clayton, Dubilier & Rice, LLC
Legal Advisor
-
-
Debevoise & Plimpton LLP
Clayton, Dubilier & Rice, LLC
Legal Advisor
-
-
Kirkland & Ellis LLP
Clayton, Dubilier & Rice, LLC
Legal Advisor
-
-
Goldman Sachs & Co. LLC
Focus Financial Partners Inc.
Fairness Opinion Provider
-
-
Jefferies LLC
Focus Financial Partners Inc.
Fairness Opinion Provider
-
-
Goldman Sachs & Co. LLC
Focus Financial Partners Inc.
Financial Advisor
-
-
Jefferies LLC
Focus Financial Partners Inc.
Financial Advisor
-
-
MacKenzie Partners, Inc.
Focus Financial Partners Inc.
Information Agent
17,500.00
-
K&L Gates LLP
Focus Financial Partners Inc.
Legal Advisor
-
-
Potter Anderson & Corroon LLP
Focus Financial Partners Inc.
Legal Advisor
-
-
Vinson & Elkins LLP
Focus Financial Partners Inc.
Legal Advisor
-
-
Equiniti Trust Company, LLC
Focus Financial Partners Inc.
Transfer Agent/Registrar
-
-
BMO Capital Markets Corp.
Stone Point Capital LLC
Financial Advisor
-
-
BofA Securities, Inc.
Stone Point Capital LLC
Financial Advisor
-
-
Citizens Capital Markets, Inc.
Stone Point Capital LLC
Financial Advisor
-
-
Date Created: Dec-
14-2023
Copyright © 2023 S&P Global Market Intelligence,
a division of S&P Global Inc. All Rights reserved.
Page 2 of 13
Focus Financial Partners Inc. > Transaction Details > Merger/Acquisition
Fifth Third Securities Inc.
Stone Point Capital LLC
Financial Advisor
-
-
Moelis & Company LLC
Stone Point Capital LLC
Financial Advisor
-
-
MUFG Securities Americas Inc.
Stone Point Capital LLC
Financial Advisor
-
-
RBC Capital Markets, LLC
Stone Point Capital LLC
Financial Advisor
-
-
Truist Securities, Inc.
Stone Point Capital LLC
Financial Advisor
-
-
Simpson Thacher & Bartlett
LLP
Stone Point Capital LLC
Legal Advisor
-
-
Transaction Details
Features
Going Private Transaction, Leveraged Buy Out (LBO), Cash Merger, Equity Reinvestment, Go Shop Provision
Deal Conditions
Approval by Regulatory Board / Committee;Approval of Merger Agreement by Target Board;Approval of Offer by Acquirer Board;Approval of Offer by
Target Shareholders;Consummation of Due Diligence Investigation;Definitive Agreement;Subject to Antitrust Regulations
Response to Conditions
Approval by Target's Shareholders
Change of Control
Yes
Deal Approach
Unsolicited
Minority/Majority Stake
Majority
Deal Attitude
Friendly
Accounting Method
Acquisition
Special Committee
Yes
Sell-side Termination Fee ($ mm)
150.35
Sell-side Termination Fee (%)
-
Buy-side Termination Fee ($ mm)
-
Buy-side Termination Fee (%)
-
Consideration Summary
Consideration Type
Cash
Offered
Date
Nov-03-2022
Current/Final
Date
Aug-31-2023
Exchange Rate
1.000
Exchange Rate
1.000
Consideration to Shareholders ($ mm)
4,135.29
Consideration to Shareholders ($ mm)
4,135.29
Offer Per Share ($ )
53.00
Offer Per Share ($ )
53.00
Total Cash ($ mm)
4,135.29
Total Cash ($ mm)
4,135.29
Total Stock ($ mm)
-
Total Stock ($ mm)
-
Total Preferred ($ mm)
-
Total Preferred ($ mm)
-
Total Debt ($ mm)
-
Total Debt ($ mm)
-
Total Hybrid ($ mm)
-
Total Hybrid ($ mm)
-
Total Rights/Warrants/Options ($
mm)
-
Total Rights/Warrants/Options ($
mm)
-
Transaction Financing
Equity Investment ($ mm)
3,664.58
SubDebt/Mezzanine ($ mm)
-
Senior Debt ($ mm)
500.00
Transaction Values
Offered
Current/Final
Date Created: Dec-
14-2023
Copyright © 2023 S&P Global Market Intelligence,
a division of S&P Global Inc. All Rights reserved.
Page 3 of 13
Focus Financial Partners Inc. > Transaction Details > Merger/Acquisition
Exchange Rate
1.000
Consideration to Shareholders ($ mm)
4,135.29
Other Consideration ($ mm)
-
Total Earnouts ($ mm)
-
Total Rights/Warrants/Options ($
mm)
29.30
Net Assumed Liabilities ($ mm)
-
Adjustment Size ($ mm)
-
Total Net Transaction Value ($ mm)
4,164.58
Total Cash & Short Term Investments ($ mm)
-
Total Gross Transaction Value ($ mm)
4,164.58
% Sought
100.0%
Implied Enterprise Value ($ mm)
-
Implied Equity Value ($ mm)
4,135.29
Exchange Rate
1.000
Consideration to Shareholders ($ mm)
4,135.29
Other Consideration ($ mm)
-
Total Earnouts ($ mm)
-
Total Rights/Warrants/Options ($
mm)
29.30
Net Assumed Liabilities ($ mm)
-
Adjustment Size ($ mm)
-
Total Net Transaction Value ($ mm)
4,164.58
Total Cash & Short Term Investments ($ mm)
-
Total Gross Transaction Value ($ mm)
4,164.58
% Sought/Acquired
100.0%
Implied Enterprise Value ($ mm)
-
Implied Equity Value ($ mm)
4,135.29
Equity Value Multiples, Offered
Implied Equity Value/LTM Net Income
41.8x
Implied Equity Value/Book Value
3.9x
Equity Value Multiples, Current/Final
Implied Equity Value/LTM Net Income
67.6x
Implied Equity Value/Book Value
3.8x
Target Stock Information 1 Day Before Announcement
Date
Nov-02-2022
Share Price ($ )
33.98
Market Capitalization ($ mm)
2,224.13
LTM Total Stock Return (%)
(48.30)%
52 Week High ($ )
69.13
52 Week High (%)
49.15%
52 Week Low ($ )
30.27
52 Week Low (%)
112.26%
Premium Analysis
Target Premiums
Price per share ($ )
Premium
One Day Prior
33.98
56.0%
One Week Prior
34.14
55.2%
One Month Prior
34.66
52.9%
Target Company Details
Focus Financial Partners Inc.
Company Name:
Focus Financial Partners Inc.
Primary Industry:
Asset Management and Custody Banks
Website:
focusfinancialpartners.com
Headquarters:
New York, United States
Business Description
Focus Financial Partners Inc. provides wealth management services to primarily ultra-high and high net worth individuals, families, and business entities. Its wealth management services include investment advice, financial and tax planning, consulting, tax return preparation, family office services, and other services. The company also offers recordkeeping and administration, and outsourced services; recommends financial products; and sells investment or insurance products. The company was founded in 2006 and is based in New York, New York. As of August 31, 2023, Focus Date Created: Dec-
14-2023
Copyright © 2023 S&P Global Market Intelligence,
a division of S&P Global Inc. All Rights reserved.
Page 4 of 13
Focus Financial Partners Inc. > Transaction Details > Merger/Acquisition
Financial Partners Inc. was taken private. Focus Financial Partners Inc. operates as a subsidiary of Ferdinand FFP Acquisition, LLC.
Target LTM Financial Information and Balance Sheet as of: Nov-03-2022 Period Ending: Sep-30-2022 Exchange Rate = 1.000
Total Revenue ($ mm)
2,119.53
Total Debt ($ mm)
2,714.14
EBITDA (Incl. Equity Inc. from Affiliates) ($ mm)
593.07
Total Preferred ($ mm)
-
EBIT (Incl. Equity Inc. from Affiliates) ($ mm)
238.26
Minority Interest ($ mm)
228.24
Net Income ($ mm)
98.96
Total Cash & ST Investments ($ mm)
150.92
Earnings from Cont. Ops. ($ mm)
141.62
Net Debt ($ mm)
2,563.22
Diluted EPS before extra ($ )
1.53
Total Assets ($ mm)
4,784.68
Total Common Equity ($ mm)
1,058.62
Seller Company Details
BlackRock, Inc. (NYSE:BLK)
Seller Name:
BlackRock, Inc. (NYSE:BLK)
Primary Industry:
Asset Management and Custody Banks
Website:
www.blackrock.com
Headquarters:
New York, United States
Business Description
BlackRock, Inc. is a publicly owned investment manager. The firm primarily provides its services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations, charities, sovereign wealth funds, corporations, official institutions, and banks. It also provides global risk management and advisory services. The firm manages separate client-focused equity, fixed income, and balanced portfolios. It also launches and manages open-end and closed-end mutual funds, offshore funds, unit trusts, and alternative investment vehicles including structured funds. The firm
launches equity, fixed income, balanced, and real estate mutual funds. It also launches equity, fixed income, balanced, currency, commodity, and multi-asset exchange traded funds. The firm also launches and manages hedge funds. It invests in the public equity, fixed income, real estate, currency, commodity, and alternative markets across the globe. The firm primarily invests in growth and value stocks of small-cap, mid-cap, SMID-
cap, large-cap, and multi-cap companies. It also invests in dividend-paying equity securities. The firm invests in investment grade municipal securities, government securities including securities issued or guaranteed by a government or a government agency or instrumentality, corporate bonds, and asset-backed and mortgage-backed securities. It employs fundamental and quantitative analysis with a focus on bottom-up and top-
down approach to make its investments. The firm employs liquidity, asset allocation, balanced, real estate, and alternative strategies to make its investments. In real estate sector, it seeks to invest in Poland and Germany. The firm benchmarks the performance of its portfolios against various S&P, Russell, Barclays, MSCI, Citigroup, and Merrill Lynch indices. BlackRock, Inc. was founded in 1988 and is based in New York City with additional offices in Boston, Massachusetts; London, United Kingdom; Gurgaon, India; Hong Kong; Greenwich, Connecticut; Princeton, New Jersey;
Edinburgh, United Kingdom; Sydney, Australia; Taipei, Taiwan; Singapore; Sao Paulo, Brazil; Philadelphia, Pennsylvania; Washington, District of Columbia; Toronto, Canada; Wilmington, Delaware; and San Francisco, California.
Company Relationship Information
Relationship Type:
Prior Investment
Percent Sold (%):
5.70000
Percent Currently Held (%):
-
Proprietary Relationship Details
Percent of Funds Invested (%):
(Proprietary Data Only)
-
Return On Investment (%):
(Proprietary Data Only)
-
Investor Notes:
(Proprietary Data Only)
J.P. Morgan Investment Management Inc.
Date Created: Dec-
14-2023
Copyright © 2023 S&P Global Market Intelligence,
a division of S&P Global Inc. All Rights reserved.
Page 5 of 13
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows:
On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following:
1. How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 310,000.00d. P 500,000.002. How much is the previously held equity interest in…
arrow_forward
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows:
On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 2: before the transaction, Richard, Inc. have 20,000 outstanding shares. Richard issued 12,000 shares as consideration for a 60% interest in Frank. Richard’s shares currently sell P55 per share in the market, while Frank’s shares are quoted at P225 per share. Richard, Inc. elected to measure NCI at “proportionate share”.
With the stated facts, answer the following:
20.How much is the total Goodwill in the books of Richard, Inc. after the business combination?a. P 140,000.00b. P…
arrow_forward
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows:
On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following:1. How much is the transaction costs incurred during the business combination?a. P 50,000.00b. P 75,000.00c. P 150,000.00d. P 130,000.002. How much is the par value of each…
arrow_forward
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows:
On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.
With the stated facts, answer the following:
4. How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 310,000.00d. P 500,000.005. How much is the previously held equity interest in…
arrow_forward
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows:
On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following:
1. How much is the goodwill (gain on bargain purchase) on the business combination?…
arrow_forward
Review of pre-consolidation equity method (controlling investment in affiliate, fair value differs from book value)
Assume an investee has the following financial statement information for the three years ending December 31, 2019:
(At December 31)
2019
2018
2017
Current assets
$285,000
$277,500
$207,000
Tangible fixed assets
662,500
575,000
563,000
Intangible assets
40,000
45,000
50,000
Total assets
$987,500
$897,500
$820,000
Current liabilities
$120,000
$110,000
$100,000
Noncurrent liabilities
266,250
242,500
220,000
Common stock
100,000
100,000
100,000
Additional paid-in capital
100,000
100,000
100,000
Retained earnings
400,000
345,000
300,000
Stockholders' equity
600,000
545,000
500,000
Total liabilities and equity
$986,250
$897,500
$820,000
(For the years ended December 31)
2019
2018
2017
Revenues
$970,000
$920,000
$850,000
Expenses
875,000
840,000
775,000
Net income
$95,000
$80,000
$75,000
Dividends
$40,000
$35,000
$25,000…
arrow_forward
Identify the type of merger in the following case: ABC manufactures furniture. It acquired a leather-producing business for a 20% share in the ownership of the former. The latter agreed.a. Vertical, Hostile, Cash Purchaseb. Horizontal, Friendly, Equity Swapc. Horizontal, Hostile, Equity Swapd. Vertical, Friendly, Equity Swap
arrow_forward
An entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000.
On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000.
If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020?
Group of answer choices
P40,000
Nil
P420,000
P160,000
arrow_forward
An entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000.
On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000.
If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020?
Group of answer choices
A) P420,000
B) P160,000
C) Nil
D) P40,000
arrow_forward
N3.
Preparing the [I] consolidation entries for sale of land
Assume that during 2015 a wholly owned subsidiary sells land that originally cost $540,000 to its parent for a sale price of $600,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.
arrow_forward
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition:
REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition
arrow_forward
Question: What is the implied goodwill on January 1, 2020?
On January 1, 2019, an entity purchased 15,000 shares of another entity representing a 12% interest for P2,500,000. The entity elected to measure the investment at FVOCI. The investee reported net income of P3,000,000 and paid dividends of P15 per share in 2019. The fair value of the investment was P2.800.000 on December 31, 2019. On January 1, 2020, the entity paid P3,000,000 for 16.250 additional shares of the investee. The fair value of the 12% interest did not change on this date. The fair values of the identifiable net assets of the investee equal carrying amount of P15,000,000 on such date except for land whose fair value exceeded carrying amount by P3,000,000. For the year ended December 31, 2020, the investee reported net income of P6,000,000 and paid dividends of P20 per share.
arrow_forward
Intra-group transaction Question (worksheet adjustment entries for the following independent transactions)
Sydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2019. Assume an income tax rate of 30%.
(b) SYD Ltd manufactures certain items which it then markets through MEL Ltd. During the current period, SYD Ltd sold items for $20 000 to MEL Ltd at cost plus 20%. MEL Ltd has sold 75% of these transferred items at 30 June 2019.
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Related Questions
- Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following: 1. How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 310,000.00d. P 500,000.002. How much is the previously held equity interest in…arrow_forwardIllustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 2: before the transaction, Richard, Inc. have 20,000 outstanding shares. Richard issued 12,000 shares as consideration for a 60% interest in Frank. Richard’s shares currently sell P55 per share in the market, while Frank’s shares are quoted at P225 per share. Richard, Inc. elected to measure NCI at “proportionate share”. With the stated facts, answer the following: 20.How much is the total Goodwill in the books of Richard, Inc. after the business combination?a. P 140,000.00b. P…arrow_forwardIllustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following:1. How much is the transaction costs incurred during the business combination?a. P 50,000.00b. P 75,000.00c. P 150,000.00d. P 130,000.002. How much is the par value of each…arrow_forward
- Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share. With the stated facts, answer the following: 4. How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 310,000.00d. P 500,000.005. How much is the previously held equity interest in…arrow_forwardIllustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following: 1. How much is the goodwill (gain on bargain purchase) on the business combination?…arrow_forwardReview of pre-consolidation equity method (controlling investment in affiliate, fair value differs from book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained earnings 400,000 345,000 300,000 Stockholders' equity 600,000 545,000 500,000 Total liabilities and equity $986,250 $897,500 $820,000 (For the years ended December 31) 2019 2018 2017 Revenues $970,000 $920,000 $850,000 Expenses 875,000 840,000 775,000 Net income $95,000 $80,000 $75,000 Dividends $40,000 $35,000 $25,000…arrow_forward
- Identify the type of merger in the following case: ABC manufactures furniture. It acquired a leather-producing business for a 20% share in the ownership of the former. The latter agreed.a. Vertical, Hostile, Cash Purchaseb. Horizontal, Friendly, Equity Swapc. Horizontal, Hostile, Equity Swapd. Vertical, Friendly, Equity Swaparrow_forwardAn entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000. If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020? Group of answer choices P40,000 Nil P420,000 P160,000arrow_forwardAn entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000. If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020? Group of answer choices A) P420,000 B) P160,000 C) Nil D) P40,000arrow_forward
- N3. Preparing the [I] consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $540,000 to its parent for a sale price of $600,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.arrow_forwardIf PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisitionarrow_forwardQuestion: What is the implied goodwill on January 1, 2020? On January 1, 2019, an entity purchased 15,000 shares of another entity representing a 12% interest for P2,500,000. The entity elected to measure the investment at FVOCI. The investee reported net income of P3,000,000 and paid dividends of P15 per share in 2019. The fair value of the investment was P2.800.000 on December 31, 2019. On January 1, 2020, the entity paid P3,000,000 for 16.250 additional shares of the investee. The fair value of the 12% interest did not change on this date. The fair values of the identifiable net assets of the investee equal carrying amount of P15,000,000 on such date except for land whose fair value exceeded carrying amount by P3,000,000. For the year ended December 31, 2020, the investee reported net income of P6,000,000 and paid dividends of P20 per share.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning