Seattle December 5, 2018 … · ASC 606, Revenue from Contracts with Customers ... (SEC Update)...
120
Seattle December 5, 2018
Transcript of Seattle December 5, 2018 … · ASC 606, Revenue from Contracts with Customers ... (SEC Update)...
SeattleDecember 5, 2018
2
Assurance 2018 Year-End Update
3
Agenda
Accounting Update AICPA Update Corporate Governance Matters Resources
4
Learning Objectives
Upon completion of today’s session participants will be able to: Recognize impact of recently released FASB guidance and proposal stage
literature Identify current resources and tools that may be of use to financial executives
and those charged with governance
5
WENDY HAMBLETON
National Assurance Partner
(312) [email protected]
TARA PENDLETON
Lead Audit Quality Director
(509) [email protected]
DANIELSHEA
Managing DirectorBDO Capital Advisors
(310) [email protected]
With You Today
6
Accounting Update
7
Accounting Update – Discussion Outline
FASB Accounting Standards Updates EITF and PCC Matters On the Horizon ASC 606, Revenue from Contracts with Customers ASC 842, Leases
8
FASB Accounting Standards Update
9
Final ASUs Issued To Date in 2018
Information is current as of December 1, 2018
ASU 2018- Title BDO Alert
01 Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 Alert
02Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated OtherComprehensive Income
Alert
03Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
Alert
04Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update)
Alert
05 Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update) N/A
10
Final ASUs Issued To Date in 2018
ASU 2018- Title BDO Alert
06 Codification Improvements to Topic 942, Financial Services—Depository and Lending N/A
07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Alert
08 Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made Alert
09 Codification Improvements N/A
10 Codification Improvements to Topic 842, Leases Alert
11 Leases (Topic 842): Targeted Improvements Alert
12 Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts Alert
Information is current as of December 1, 2018
11
Final ASUs Issued To Date in 2018
Information is current as of December 1, 2018
ASU 2018- Title BDO Alert
13 Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Alert
14Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans
Alert
15Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
Alert
16Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
Alert
17 Consolidation (Topic 810):Targeted Improvements to Related Party Guidance for Variable Interest Entities Alert
12
Final ASUs Issued To Date in 2018
Information is current as of December 1, 2018
ASU 2018- Title BDO Alert
18 Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606 Alert
19 Codification Improvements to Topic 326, Financial Instruments- Credit Losses Coming Soon
13
ASU 2018-01 - Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 ASU 2018-01 eases the adoption of ASU 2016-02, Leases (Topic 842), for entities with
land easements that exist or expire before an entity’s adoption of Topic 842. The ASU will benefit entities that do not account for those land easements as leases under existing GAAP (Topic 840).
Intended to reduce the cost and complexity associated with assessing whether all existing and expired land easements meet the definition of a lease.
Allows entities who previously did not account for land easements under Topic 840 to elect a transition practical expedient to not assess those land easements under Topic 842.
Once an entity adopts Topic 842, it must apply that Topic prospectively to all new or modified land easements, and may only apply the guidance in Example 10 of ASC 350-30 after concluding that a land easement does not meet the new definition of a lease.
An entity that currently accounts for land easements under Topic 840 may not elect this practical expedient.
Effective date generally coincides with ASU 2016-02.
14
ASU 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Provides entities the option to reclassify certain “stranded tax effects”
resulting from the recent US tax reform from accumulated other comprehensive income to retained earnings.
Reporting entities will select an accounting policy to either reclassify all stranded tax effects caused by tax reform from AOCI to retained earnings, or continue recycling stranded effects (including those caused by tax reform) through earnings in future periods.
Disclosure of either policy is required in all cases. The reclassification from AOCI to retained earnings is presented in the
statement of shareholders equity. Effective for fiscal years beginning after December 15, 2018.
15
ASU 2018-03 - Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities The amendments address the following specific issues within ASU 2016-01:
1. Equity securities measured using measurement alternative – may change measurement approach to a fair value (FV) method through an irrevocable election that would apply to all identical or similar investments.
2. Adjustments made under the measurement alternative are intended to reflect the FV of the security as of the date that the observable transaction for a similar security took place.
3. Remeasuring the entire value of forward contracts and purchased options is required when observable transactions occur on the underlying equity securities.
4. When the FV option is elected for a financial liability, the guidance in paragraph 825-10-45-5 should be applied, regardless of whether the FV option was elected under either Subtopic 815-15 or 825-10.
16
ASU 2018-03 - Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (cont’d)
5. When the FV option is elected for a financial liability, the amount of change in FV that relates to the instrument- specific credit risk should first be measured in the currency of denomination when presented separately from the total change in FV of the financial liability. Then, both components of the change in the FV of the liability should be remeasured into the functional currency of the reporting entity using end-of-period spot rates.
6. The prospective transition approach for equity securities without a readily determinable FV in the amendments in ASU 2016-01 is meant only for instances in which the measurement alternative is applied.
Effective date generally coincides with ASU 2016-01, with certain exceptions.
17
ASU 2018-04 - Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273Issued: March 2018
Summary: ASU 2018-04, supersedes various SEC paragraphs and adds SEC paragraph related to Staff Accounting Bulletin (SAB) No. 117 which amends certain SAB topics to make them consistent with current auditing and accounting guidance, FASB ASC Topic 320. SAB 117 amends SAB Topic 563 to indicate that SAB Topic 5.M is no longer applicable upon adoption of Topic 320. Topic 320 creates new guidance that “eliminates the ability to present changes in the fair value of investments in equity securities within other comprehensive income, which eliminates the need for Topic 5.M.”
18
ASU 2018-05 - Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 SEC staff interpretations issued on 12/22/17
Measurement period approach to account for US Tax Reform implications (up to 12 months from the enactment date to complete accounting for all of the effects)
Incomplete accounting (SAB 118 can only be used when the accounting for one or more effect(s) cannot be completed in the enactment period)
Reasonable estimate(s) until completed accounting (must determine a reasonable estimate(s) as soon as possible within the measurement period and continue revise them until the accounting is complete)
Disclosure requirements (what accounting is incomplete and why, the provisional amounts used, information needed to complete the accounting, the completed accounting)
FASB Staff Q&A issued mid January 2018 (FASB’s staff does not object to private entities electing to use SAB 118 guidance to comply with the accounting for US Tax Reform
19
ASU 2018-06 - Codification Improvements to Topic 942, Financial Services—Depository and LendingIssued: May 2018
Summary: ASU 2018-06 supersedes the guidance in Subtopic 942-740, Financial Services—Depository and Lending—Income Taxes, that is related to Circular 202 because that guidance has been rescinded by the Office of the Comptroller of the Currency and no longer is relevant. It is effective immediately upon issuance.
20
ASU 2018-07 - Improvements to Nonemployee Share-Based Payment AccountingSummary: ASU 2018-07 supersedes most of the prior accounting guidance on nonemployee share-based payments, and instead aligns the guidance with existing guidance on employee share-based payments in Topic 718.
Key Amendments Nonemployee share-based payment transactions will be measured by
estimating the fair value of the equity instruments that an entity is obligated to issue.
Measurement date will be consistent with the measurement date for employee share-based payment awards (i.e., grant date for equity-classified awards).
Consider probability on nonemployee awards with performance conditions. Classification will continue to be subject to the requirements of Topic 718. Cost recognition of nonemployee awards is unchanged, i.e., as if paid in cash.
21
ASU 2018-07 - Improvements to Nonemployee Share-Based Payment Accounting (cont'd)Key Amendments (cont'd) Use of calculated value for private companies. One-time election for private companies to use intrinsic value on liability-
classified awards.
Effective Date Public business entities – fiscal years beginning after 12/15/18, including
interim periods within that fiscal year. Other entities - fiscal years beginning after 12/15/19, and interim periods
within fiscal years beginning after 12/15/20. Early adoption is permitted, but no earlier than an entity’s adoption date of
Topic 606.
22
ASU 2018-08 - Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions MadeSummary: ASU 2018-08 clarifies the accounting guidance for making or receiving contributions. This primarily affects not-for-profit (NFP) entities, although it also applies to businesses. The ASU will likely result in more grants and contracts being accounted for as either contributions or conditional contributions rather than exchange transactions compared to current guidance.
Key Amendments Provide a framework for evaluating whether transactions should be
accounted for as contributions (nonreciprocal transactions) within the scope of Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance.
Provide guidance for determining whether a contribution is conditional.
23
ASU 2018-08 - Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (cont'd)Effective Date - Contributions Received Public entities* - annual periods beginning after 6/15/18, including interim
periods within those annual periods. Other entities - annual periods beginning after 12/15/18, and interim periods
within annual periods beginning after 12/15/19.
Effective Date - Contributions Made Public entities* - annual periods beginning after 12/15/18, including interim
periods within those annual periods. Other entities - annual periods beginning after 12/15/19, and interim periods
within annual periods beginning after 12/15/20.
*ASU 2018-08 defines public entity as public business entity or an NFP that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and serves as a resource recipient
24
ASU 2018-10 - Codification Improvements to Topic 842, LeasesSummary:
ASU 2018-10 includes sixteen narrow amendments to the leases standard to clarify the intended application of certain aspects of the new leases guidance and correct cross-reference inconsistencies. Effective date aligns with effective date of ASU 2016-02.
Key Amendments Include:
Calculation of rate implicit in the lease when lease contains significant variable payments
Calculation of impairment of net investment in the lease
Calculation of certain transition adjustments
Transition guidance for amounts previously recognized in business combinations
12 other less significant codification improvements
25
ASU 2018-11 - Leases: Targeted Improvements
Summary:
ASU 2018-11 provides entities with an additional (optional) transition method to adopt the new leases standard. ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to elect not to separate nonlease components from the associated lease component. Effective date aligns with effective date of ASU 2016-02.
Transition—Comparative Reporting at Adoption:
Under the new transition method entities: • Can initially apply the new leases guidance at the adoption date (rather than at the beginning of
the earliest period presented)
• Recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption (for example, January 1, 2019 for a calendar year-end public company)
• Continue to present the comparative periods under Topic 840 (the legacy leases guidance)
If an entity elects the new transition method, it is required to provide the Topic 840 disclosures for all prior periods that remain under the legacy leases guidance.
26
ASU 2018-11 - Leases: Targeted Improvements (cont’d)Separating Components of a Contract
ASU 2018-11 provides lessors with a practical expedient to not separate lease and nonlease components by asset class similar to the option lessees have; however, limitations apply for lessors.
In order for a lessor to qualify for the practical expedient, the nonlease components must be in the scope of the new revenue guidance. In addition, the following two criteria must be met:1. The timing and pattern of transfer of the nonlease component(s) and associated lease
component are the same.2. The lease component, if accounted for separately, would be classified as an
operating lease. After combining, the lessor accounts for the combined item under either 842 or 606,
depending on which component is predominant.
27
ASU 2018-11 - Leases: Targeted Improvements (cont’d)Separating Components of a Contract (cont’d)
Additional disclosures required when a lessor elects the practical expedient (including when the combined component is accounted for under Topic 606):• The fact that the entity elected the expedient• Which asset classes are affected• The nature of (a) the lease component and nonlease component(s) that were
combined as a result of applying the practical expedient and (b) any nonlease components that were not eligible for the practical expedient and, thus, not combined
• The Topic the entity applies to the combined component
28
ASU 2018-12 - Targeted Improvements to the Accounting for Long Duration Contracts Summary:
ASU 2018-12 introduces targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts such as life insurance, disability income, long-term care and annuities issued by an insurance entity. The changes do not apply to policyholders or noninsurance companies.
Key Amendments Include:
Changes to assumptions used to measure the liability for future policy benefits for traditional and limited-payment contracts
Measurement of market risk benefits at fair value
Simplification of amortization of deferred acquisition costs
Additional disclosures
Effective Dates:
Public business entities - FYs beginning after 12/15/2020
All other entities - FYs beginning after 12/15/2021
29
ASU 2018-13 - Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Summary: Improves/clarifies disclosures related to fair value measurements required under ASC 820.
Modifications
1. Nonpublic entities: Replaces rollforward of Level 3 measurements with information about transfers into/out of Level 3 and purchases/issues of Level 3 assets and liabilities.
2. Requires disclosure of timing of liquidation of investee assets and date restrictions from redemption lapse related to investments in entities that calculation NAV only if investee has communicated timing.
3. Clarifies that measurement uncertainty disclosure relates to uncertainty in measurement as of the reporting date.
Additions (For public companies only)
1. Disclose changes in unrealized gains/losses included in OCI for recurring Level 3 measurements held at the end of the reporting period.
2. Disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Certain alternatives apply.
30
ASU 2018-13 - Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Removals
1. Amount of and reasons for transfers between Level 1 and Level 2.
2. The policy for timing of transfers between levels.
3. The valuation processes for Level 3 fair value measurements.
4. Nonpublic entities: changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.
Effective Date:
All entities* - FYs beginning after 12/15/2019
* An entity is permitted to early adopt all disclosure requirements in the ASU or early adopt only the removed and modified disclosures and delay adoption of the additional disclosures until their effective date.
31
ASU 2018-14 - Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans Summary: Improves/clarifies disclosure requirements under ASC 715-20 for employers that sponsor defined benefit pension or other postretirement plans.
Additions
1. Weighted-average interest crediting rates for cash balance plans and certain other plans. 2. Explanation of the reasons for significant gains and losses related to changes in the
benefit obligation for the period.
Clarifications
For entities with multiple plans that provide aggregated disclosures, the following information for defined benefit pension plans should be disclosed:1. Projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in
excess of plan assets.2. Accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in
excess of plan assets.
32
ASU 2018-14 - Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (cont’d)Removals
1. Amounts in AOCI expected to be recognized as components of net periodic benefit cost over the next fiscal year.
2. Amount and timing of plan assets expected to be returned to employer.3. Disclosures related to June 2001 amendments to Japanese Welfare Pension Insurance
Law.4. Certain related party disclosures5. Nonpublic entities: Replace reconciliation of opening balances to closing balances of plan
assets measured on a recurring basis in Level 3 with the amounts of transfers into and out of Level 3 and purchases of Level 3 plan assets.
6. Public entities: Effects of a 1% change in assumed health care cost trend rates on the (a) aggregate of service and interest components and (b) benefit obligation for postretirement health care benefits.
33
ASU 2018-14 - Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (cont’d)Effective Dates:
Public business entities - FYs beginning after 12/15/2020
All other entities – FYs beginning after 12/15/2021
34
ASU 2018-15 - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Summary: Requires a customer in a hosting arrangement (service contract) to apply the guidance on internal-use software to determine which implementation costs to recognize as an asset and which costs to expense.
Key Amendments: Customer must determine whether an implementation activity relates to the preliminary project
stage, the application development stage, or the post-implementation stage.
Costs for implementation activities in the application development stage will be capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages will be expensed immediately.
Additional guidance on how to assess capitalized costs for impairment and appropriate presentation of capitalized costs and related amortization.
Effective Dates: Public business entities - FYs beginning after 12/15/2019
All other entities – FYs beginning after 12/15/2020
35
ASU 2018-16 - Inclusion of the Secured Overnight Financing Rate Overnight Index Swap Rate as a Benchmark Interest Rate for Hedge Accounting PurposesIssued: October 2018
Summary: ASU 2018-06 to permit the use of the Overnight Index Swap (OIS) Rate based on Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rates for purposes of hedge accounting under Topic 815, Derivatives and Hedging. An entity must adopt the amendments concurrently with the adoption of the amendments within ASU 2017-12.
The Master Glossary defines the new term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate as:
“The fixed rate on a U.S. dollar, constant-notional interest rate swap that has itsvariable-rate leg referenced to the Secured Overnight Financing Rate (SOFR) (anovernight rate) with no additional spread over SOFR on that variable-rate leg. That fixedrate is the derived rate that would result in the swap having a zero fair value atinception because the present value of fixed cash flows, based on that rate, equates tothe present value of the variable cash flows.”
36
ASU 2018-17 - Consolidation (Topic 810):Targeted Improvements to Related Party Guidance for Variable Interest Entities (VIEs)Issued: October 2018
Summary: Improves application of the consolidation guidance for targeted areas.
Key Amendments: Private company alternative – private companies may elect not to apply VIE guidance to legal
entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities.
Clarifies that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests, consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE.
Effective Dates: Public business entities - FYs beginning after 12/15/2019
All other entities – FYs beginning after 12/15/2020
37
ASU 2018-18 – Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topics 808 and 606Issued: November 2018
Summary: Clarifies the interaction between Topics 808 and 606.
Key Provisions: Clarifies that certain transactions between collaborative arrangement participants should be
accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements.
Adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606.
Requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer.
Effective Dates: Public business entities - FYs beginning after 12/15/2019
All other entities – FYs beginning after 12/15/2020
38
ASU 2018-19 – Codification Improvements to Topic 326, Financial Instruments- Credit Losses
Issued: November 2018
Summary: Revised the effective date for nonpublic business entities and clarified interaction with Topic 842, Leases.
Key Provisions: The amendments in this Update mitigate transition complexity by requiring that for nonpublic
business entities the amendments in Update 2016-13 are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.
The amendment clarifies that receivable arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases.
Effective Dates: Public business entities that are SEC Filers - FYs beginning after 12/15/2019
All other Public business entities – FYs beginning after 12/15/2020
All other entities – FYs beginning after 12/15/2021
39
FASB STAFF Q&APrivate Companies and NFP’s Can Apply SAB 118
Background: SEC staff released SAB 118 for applying Topic 740, Income Taxes, as it relates to the 2017
Tax Cuts and Jobs Act Outlines the approach companies may take if they determine that the necessary
information is not available (in reasonable detail) to • Evaluate • Compute• Prepare accounting entries• To recognize the effect(s) of the Act by the time the financial statements are
required to be filed. Companies may use this approach when the timely determination of some or all of the
income tax effect(s) from the Act is incomplete by the due date of the financial statements.
SAB 118 also prescribes disclosures that reporting entities must provide
40
FASB STAFF Q&APrivate Companies and NFP’s Can Apply SAB 118 (cont’d)Summary: The FASB staff would not object to private companies and not-for-profit entities applying
SAB 118• Private company or not-for-profit entity opting to apply SAB 118 would need to do so
in its entirety, including the disclosure requirements. • Reporting entity should also disclose its accounting policy of applying SAB 118,
required by ASC paragraphs 235-10-50-1 through 50-3
41
EITF and PCC Matters Update
42
Emerging Issues Task Force (EITF) September 27, 2018 Meeting
Issue 18-A: Recognition under Topic 805 for an Assumed Liability in a Revenue ContractStatus: Consensus-for-Exposure Reaffirmed consensus-for-exposure that the performance obligation concept in Topic 606
would be used to determine whether a liability assumed from a revenue contract with acustomer is recognized by the acquirer in a business combination.
Recommended to the Board that the staff issue an Invitation to Comment to solicit inputabout measurement and other topics.
Issue 18-B: Cost Capitalization for Episodic Television SeriesStatus: Consensus-for-Exposure Reached tentative conclusions regarding impairment testing, including unit of account
guidance.
Reached tentative decision to align guidance in ASC 926-20 and ASC 920-350 onpresentation of film costs by eliminating the specific classification requirements in bothof those subtopics.
Next meeting: November 15, 2018
43
PCC UpdateOctober 9, 2018 Meeting
Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities
Leases Implementation Distinguishing Liabilities from Equity Disclosure Framework: Disclosure Review—Income Taxes Share-Based Compensation
Meeting recap here.
The PCC is scheduled to meet next on December 11, 2018.
44
On the Horizon
45
ASUs with Upcoming Effective Dates*
ASU 2016-02, Leases (Topic 842) - Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted.
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments - For public business entities that are SEC filers, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment - For public business entities that are SEC filers, the amendments are effective for fiscal years beginning after December 15, 2019. For all other public business entities, the amendments are effective for fiscal years beginning after December 15, 2020.
ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities – Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted.
*Effective dates shown here apply to public entities. Effective dates for all other entities are generally one year later.
46
ASUs with Upcoming Effective Dates (cont’d)
ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception - Part I of the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities - Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the amendments for existing hedging relationships on the date of adoption.
ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 - Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Specific transition requirements apply.
47
ASUs with Upcoming Effective Dates (cont’d)
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income -Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for which financial statements have not yet been made available for issuance. Entities have the option to record the reclassification either retrospectively to each period in which the income tax effects of tax reform are recognized, or at the beginning of the annual or interim period in which the amendments are adopted.
ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting - Effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.
ASU 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made - Effective for annual reporting periods beginning after June 15, 2018, including interim periods within that annual period.
48
ASUs with Upcoming Effective Dates (cont’d)
ASU 2018-09, Codification Improvements - Effective for fiscal years beginning after December 15, 2018.
ASU 2018-10, Codification Improvements to Topic 842, Leases - Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
ASU 2018-11, Leases (Topic 842): Targeted Improvements - Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes - Effective for entities that already have adopted the amendments in Update 2017-12, for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For entities that have not already adopted Update 2017-12, the amendments in this Update are required to be adopted concurrently with the amendments in Update 2017-12.
49
ASC 606, Revenue from Contracts with Customers
50
ASC 606Overview
Revenue from Contracts with Customers issued in May 2014 (ASU 2014-09)
Subsequently amended by:• ASU 2015-14, Deferral of the Effective Date
• ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
• ASU 2016-10, Identifying Performance Obligations and Licensing
• ASU 2016-12, Narrow Scope Improvements and Practical Expedients
• ASU 2016-20, Technical Corrections and Improvements to Topic 606
A single, principle-based revenue standard for U.S. GAAP and IFRS that replaces almost all existing U.S. GAAP and IFRS guidance
The new revenue standard aims to improve accounting for contracts with customers by: • Providing a more robust framework for addressing revenue issues as they arise
• Increasing comparability across industries and capital markets
• Requiring better disclosure
51
ASC 606Scope
Applies to:
Contracts with customers, which may include in certain circumstances:
• Collaborations if counterparty is a customer
• Hybrid contracts for which revenue & non-revenue components have been separated
Gain/loss recognition on sale of some nonfinancial assets (intangibles and PP&E)
Applies to all industries, with certain specific transactions excluded: leases, insurance contracts, financial instruments, guarantees, certain nonmonetary exchanges
ASU 2016-20 clarified certain scope matters:
• All contracts within the scope of Topic 944 are excluded
• Loan guarantee fees within the scope of Topic 460 (other than product or service warranties) are excluded
• Fixed-odds wagering contracts issued by casino entities are exempt from derivative accounting and are included
52
ASC 606 Effective Dates
Public business entities Fiscal years beginning after 12/15/17 (and interim periods within) Early adoption permitted only as of FYs beginning after 12/15/16 (and interim
periods within)Nonpublic entities FYs beginning after 12/15/18 (and interim periods within FYs beginning after
12/15/19) Early adoption permitted as of either:
• FYs beginning after 12/15/16 (and interim periods within), or• FYs beginning after 12/15/16 and interim periods within FYs beginning one
year after the annual period in which an entity first applies the new standard.
Per ASU 2015-14, Deferral of the Effective Date
53
ASC 606The Five Step Model
Core Principle:
Recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
STEP 1:
Identify The Contract
STEP 2:
Identify Separate
Performance Obligations
STEP 3:
Determine Transaction
Price
STEP 4:
Allocate Transaction
Price to Performance Obligations
STEP 5:
Recognize Revenue When/As
Performance Obligations Satisfied
Steps to Apply the Core Principle Are:
54
STEP 1: Identify the Contract
Contracts can be written, oral, or implied by the entity’s business practices Contracts with customers must meet FIVE criteria
• 5th criterion – collectibility – may require judgment and estimates• Reassessment required in certain circumstances
Specific guidelines for combining contracts Specific guidelines for contract modifications
• Separate contract• Termination and creation of new contract• Continuation of previous contract
55
STEP 2: Identify Separate Performance Obligations
Definition of a ‘Distinct’ Good or Service:
Can the customer benefit from the good or service, either on its own, or with other readily available resources?
(‘readily available resources’ are those that the customer possess or is able to obtain from the entity or another third party)
The good or service is not ‘distinct’
(these are then grouped into ‘bundles’ of goods and services that are themselves ‘distinct’)
No
Yes
Is the promise to transfer a good or service separate from the other promised goods or services in the contract?
Indictors that it is not separately identifiable may include:
The good or service IS ‘distinct’
The entity provides a significant service of integrating the
goods and services.
A good or service significantly modifies or
customizes the other goods and
services.
A good or service is highly dependent
or interrelated with the other goods and services.
No
Yes
A performance obligation is a promise to provide goods or services (or a combination thereof) that are either: a) distinct, or b) homogenous, and meets certain criteria
56
Definition of Transaction Price: The transaction price is the amount of consideration to which an entity expects to be
entitled in exchange for transferring promised goods or services to a customer.
Excluding amounts collected on behalf of third parties – e.g. sales taxes etc.
The consideration promised in a contract with a customer can vary in terms of nature and timing, and this affects the determination of the transaction price.
Specific consideration is given to:
(i) Variable consideration (including constraints on estimates of variable consideration)
(ii) The existence of a significant financing component in the contract
(iii) Non-cash consideration
(iv) Consideration payable to a customer
STEP 3: Determine Transaction Price
57
An entity allocates/splits the transaction price (determined in Step #3) between its performance obligations (identified in Step #2)
The allocation is based on the relative ‘standalone selling prices’ of each identified performance obligation, being:
The price at which an entity would sell a promised good or service separately to a customer.
Specific consideration is given to:
(i) Determining the Standalone Selling Price of a Performance Obligation
(ii) Methods of Estimating the Standalone Selling Price
(iii) Variable Consideration – Determining Allocation
(iv) Discounts – Determining Allocation
STEP 4: Allocate Transaction Price to Performance Obligations
58
STEP 5: Recognize Revenue
Revenue is recognized as/when an entity satisfies each performance obligation (i.e., when it transfers ‘control’ of the goods or services to the customer) Control - ability to direct use of and obtain substantially all remaining benefits from an
asset (or prevent others from doing so)
Revenue is recognized either:Over time, when one of the following criteria is met:
Or, at a point in time, when none of the above criteria is met. ASC 606 provides certain indicators to consider.
(i) The customer simultaneously receives and consumes the economic benefits provided by the vendor’s performance.
(ii) The vendor creates or enhances an asset controlled by the customer.
(iii) The vendor’s performance does not create an asset for which the vendor has an alternative use, and the vendor has an enforceable right to payment for performance completed to date.
59
ASC 606Other Considerations
Licensing Contract costs Warranties Principal vs. agent (presenting revenue gross vs. net) Presentation Disclosures Transition
60
BDO Knows Newsletters Topic 606 – Presentation and Disclosure (October
2017)
Topic 606 – Exploring Transition Methods (October 2017)
Overview of Topic 606 (March 2017)
Self-Study Programs ASC 606, Revenue from Contracts with Customers
Applying the New Revenue Standard, Part 1
Applying the New Revenue Standard, Part 2
BDO Revenue Resource Center https://www.bdo.com/services/assurance/revenue-
recognition/overview
REVENUEBDO Resources
61
ASC 842, Leases
62
ASC 842Overview
Leases (Topic 842) issued February 2016 (ASU 2016-02) Dual approach for lessees and lessors Comprehensive framework covers:
• Scope and identifying a lease• Lease classification and payments• Short-term leases• Lessee accounting and presentation• Lessor accounting and presentation• Disclosures
63
ASC 842Scope
Definition of a lease - a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration
Applies to all leases and subleases, except: • Leases of intangible assets (Topic 350)• Leases for exploration or use of certain natural resources (Topics 930 & 932)• Leases of biological assets (Topic 905)• Leases of inventory (Topic 330)• Leases of assets under construction (Topic 360)
Scope exception for short-term leases (term less than 12 months) Separation of non-lease components
64
ASC 842Effective Dates
Public business entities FYs beginning after 12/15/18 (and interim periods within) Early adoption permitted
Nonpublic entities FYs beginning after 12/15/19 (interim periods within FYs beginning after
12/15/20) Early adoption permitted
65
Identifying a Lease
LeaseA contract, or part of a contract, that conveys the right to control the
use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration
Determine at inception based upon:• Whether contract fulfillment depends on use of an identified asset*• Whether contract conveys right to control use of identified asset for
consideration for a time period
* Consider whether supplier has substantive right of substitution
66
Identifying a Lease
• Right to control use of the identified asset depends upon:- Right to obtain substantially all economic benefits from the use of the
identified asset (e.g., through using, holding, or subleasing the asset).- “Economic benefits” is fairly broad- Consider within defined scope of customer’s contractual right to use the
asset- Right to direct the use of an identified asset. This exists when customer has
the right to direct how and for what purpose the asset is used, including the right to change how and for what purpose the asset is used, throughout the period of use.
67
ASC 842Lessee Overview
Right of use model – recognize ROU asset and lease liability at inception for all leases• Optional exemption for leases with terms < 12 months
Classify all leases as finance or operating (5 criteria)• Finance lease – lessee effectively obtains control of underlying asset• Operating lease – lessee does not effectively obtain control of underlying
asset Similar balance sheet impact; different income statement and cash flow results
68
LEASE TERM AND PAYMENTS
Lease Term• Estimated as the non-cancellable
period of the lease• Include periods under option to
extend IF lessee is reasonably certainto exercise option
• Include periods under option to terminate IF lessee has is reasonably certain NOT to exercise option
• Same analysis for purchase options
Lease Payments (Rentals)• Fixed lease payments (less incentives to
be paid by lessor)
• Variable payments tied to an index
• Variable payments which are in-substance fixed payments
• Residual value guarantees (probable amount)
• Exercise price of purchase option IF lessee is reasonably certain to exercise option
• Termination penalties IF lease term reflects lessee exercising option
• Fees paid to structure an SPE
Two elements form basis for PV of lease payments:
69
LEASE CLASSIFICATION
Five criteria for finance lease (lessee) / sales-type lease (lessor):
1. Transfer of ownership of underlying asset to lessee by end of lease term2. Option to purchase underlying asset that lessee is reasonably certain to
exercise3. Lease term = major part of remaining economic life of underlying asset4. Sum of PV lease payments and PV any residual value guaranteed by lessee ≥
substantially all of the FV of underlying asset5. Underlying asset is of such a specialized nature that it is expected to have no
alternative use to lessor at end of lease term
If one or more of the above are met, classify as finance/sales-type lease.
70
LEASE CLASSIFICATION
When none of the first five criteria are met, two other criteria for direct financing classification should be evaluated (lessor):
1. PV of lease payments + residual value guarantee by third party equals or exceeds substantially all of underlying asset FV.
2. It is probable that lessor will collect lease payments plus residual value guarantee.
Both of the above criteria must be met for a lessor to classify as direct financing. Otherwise, classify as an operating lease.
71
ASC 842Lessor Overview
Classify all leases as sales-type, direct finance, or operating (similar to existing U.S. GAAP) based on same criteria as lessees, plus a few others• Sales-type lease - transfers all risks and rewards, plus control of underlying
asset, to lessee• Direct financing – transfers risks and rewards but not control• Operating – does not transfer risks and rewards or control
Subsequent accounting is consistent with existing U.S. GAAP* Control principle aligned with new revenue standard
* Leveraged lease treatment no longer available for new leases
72
Updated in 2018, BDO’s Leases Practice Aid provides broad resources and examples to assist lessees, lessors, and practitioners in complying with the leasing standard ASU 2016-02 issued by the Financial Accounting Standards Board in 2016, taking effect beginning 2019.
https://www.bdo.com/insights/assurance/fasb/fasb-newsletter-october-2018
Leases – BDO NewsletterUpdated October 2018!
73
AICPA Update
74
AICPA issued SAS 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern
Effective for audits of F/S of nonissuersfor periods ending on or after 12/15/2017, and reviews of interim financial information for interim periods beginning after FYs ending on or after 12/15/2017
Addresses FASB ASU 2014-15 and supersedes SAS 126
Retains requirement for auditor to make a separate conclusion regarding the existence of substantial doubt about an entity’s ability to continue as a going concern, among other matters
Significant changes include:
• Financial support by 3rd parties or the entity’s owner-manager
• Period beyond management’s assessment
• Use of emphasis of paragraphs when substantial doubt is alleviated
• Interim financial information
• F/S prepared in accordance with a special purpose framework
Refer to BDO Flash Report
AICPA SAS 132Going Concern Standard
75
Corporate Governance Matters
76
CAQ’s Main Street Investor Survey
https://www.thecaq.org/2018-main-street-investor-survey
77
CAQ Audit Committee Barometer Key findings from 2018 Audit Committee Barometer:
The CAQ concludes that year-over-year finding trends indicate that Audit Committees are voluntarily providing robust disclosures to inform investors.
https://www.thecaq.org/resources
78
BDO KNOWS GOVERNANCE2018 Governance Surveys
2018 BDO Board Survey
Tax Reform: High Expectations Meet Reality
Time to Track Total Tax Liability
Boards Seek Auditor Review of Non-GAAP Measures and KPIs
Sustainability Reporting Takes a Back Seat in 2018
Boards Focus on Diversity and Overboarding
2018 BDO Cyber Governance Survey
Digital Transformation and Disruption Driving New Value
Cybersecurity Continues to be at the Forefront of Boards’ Concerns
A New Era of Data Privacy
79
U.S. is still relatively at the early stage of non financial reporting
Global Considerations: Regulations vary globally; primarily voluntary in U.S.
No single endorsed global reporting framework – e.g., GRI, IIRC, SASB, OECD Guidance, etc.
Four main factors encouraging U.S. reporting: Stakeholder interest: investors, regulators…
SEC required climate change-related disclosure
Sustainability Accounting Standards Board (SASB) publishing industry-specific standards advising disclosures organizations should include in their mandatory financial SEC filings (based on concept of materiality)*
Competitor reporting*Note: SEC Reg S-K requires certain sustainability-related info to be disclosed in MD&A, or Form 20-F along with risk factors.
Sustainability/ESG Reporting
80
Cybersecurity Preparedness
Regulatory Update: SEC In February 2018, the SEC released interpretive guidance to
assist public companies in preparing disclosures about cybersecurity risk
Center for Audit Quality CAQ issued a tool to assist board members in their oversight
of data security and cybersecurity risks and disclosures.
BDO Webinars Cybersecurity – Resources Boards Want to Know About
(archived)
What’s on the Minds of Boards? 2018 Cyber Governance Survey (11/8/18 and 11/28/18)
81
GDPR compliance is effective May 2018!
Far-reaching data protection regulation: • Effects organizations in the European
Union (EU) or those that offer goods and services to individuals in the EU, or that collect and analyze data related to EU residents, regardless of their location.
• This is a nuanced and complex regulation that impacts nearly all businesses.
Refer to BDO GDPR Insights
General Data Protection Regulation
82
2018 BDO Audit Quality Report
2018 BDO Approach to Audit Qualityavailable on BDO.com
83
Corporate Governance Resources
84
Finally, a resource center with the continual education needs of those charged with governance andfinancial reporting in mind!
AN INCREDIBLE RESOURCE AT YOUR FINGERTIPSThe BDO Center for Corporate Governance and Financial Reporting was born from the need to have a comprehensive, online, and easy-to-use resource for topics relevant to boards of directors and financial executives. We encourage you to visit the Center often for up-to-date information and insights you can rely on.
What you will find includes:
Thought leadership, practice aids, tools, and newsletters
Technical updates and insights on emerging business issues
Three-pronged evolving curriculum consisting of upcoming webinars and archived self-study content
Opportunities to engage with BDO thought leaders
External governance community resources
The BDO Center for Corporate Governance and Financial Reporting
For more information about BDO’s Center for Corporate Governance and Financial Reporting,please go to: www.bdo.com/resource-centers/governance
To begin receiving email notifications regarding BDO publications and event invitations (live and web-based), visit
www.bdo.com/member/registration and create a user profile.
If you already have an account on BDO’s website, visit the My Profile page to login and manage your account preferences
www.bdo.com/member/my-profile.
A dynamic and searchable on-line resource for board of directors and financial executives
85
BDO BOARD GOVERNANCEWebinars
Title Date2018 Executive and Board Pay Outlook for Mid-Cap Companies – Are Your Prepared? Dec 19, 2018Adding Value Via Internal Audit Transformation: Finding the Right Balance Nov 27, 2018What’s on the Minds of Boards – BDO 2018 Cyber Governance Survey Nov 8 & 28, 2018What’s on the Minds of Boards - BDO 2018 Board Survey Nov 7, 2018Quarterly Technical Update – Q3 2018 Oct 2018Cybersecurity: Protecting Your Organizations from Today’s Everchanging Threats Oct 2018Cybersecurity - Resources Boards Want to Know About Sept 2018Quarterly Technical Update – Q2 2018 July 2018From Scandals to Serious Setbacks: How a Poor Company Culture Can Impact… June 2018Impact of U.S. Income Changes on Cross Board Mobility May 2018The New Leasing Standard – Are Your Ready? May 20182018 Shareholder Meetings – What’s on Deck? April 2018Quarterly Technical Update – Q1 2018 April 2018Compensation Committee: Tax Reform Impacts & Other Trends… Feb 2018Tax Reform and the Board’s Role Jan 2018
86
BDO BOARD GOVERNANCEPublications
For a complete listing of BDO publications, refer to: https://www.bdo.com/insights/
Title DateSignificant Accounting and Reporting Matters Q3 2018 Oct 2018SEC Extends Filing Due Dates for Registrants Affected by Hurricane Michael Oct 20182018 BDO Cyber Governance Survey Oct 2018SEC Issues Guidance on Interim Reporting Requirements to Disclose Changes in Shareholders’ Equity Oct 2018
FASB Amends Fair Value Disclosure Requirements Oct 2018FASB Amends the Disclosure Requirements for Defined Benefit Plans Oct 2018FASB Improves Accounting for Long-Duration Contracts Oct 2018FASB Clarifies Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Service Arrangement Sept 2018
SEC Extends Filing Due Dates for Registrants Affected by Hurricane Florence Sept 20182018 BDO Board Survey Sept 2018SEC Eliminates Outdated and Redundant Disclosure Requirements Sept 2018SEC Proposed to Simplify and Streamline Disclosures for Registered Debt Offerings August 2018FASB Issues Clarifications to Leases Standard August 2018
87
BDO BOARD GOVERNANCEPublications
Title DateFASB Issue Targeted Improvements to Leases Standard August 2018Significant Accounting & Reporting Matters – Q2 2018 July 2018FASB Simplifies Accounting for Non-Employee Share-Based Payments July 2018CAQ Issues CAMs: Key Concepts and FAQs for Audit Committees, Investors… July 2018CECL Implementation Guidance July 2018SEC Amends Smaller Reporting Company Definitions and Requires Inline XBRL July 2018Initial Offerings Newsletter – Summer 2018 July 2018BDO 2018 Delivering on Our Audit Quality Intent June 2018BDO Comment Letter – Proposed Revised Interpretation Information System Services June 2018BDO Comment Letter – Collaboration Arrangements (Topic 808): Targeted Improvement June 2018PCAOB Transitions for the Future – Perspectives of the PCAOB Chairman June 2018Cybersecurity Risk Management Oversight: A Tool for Board Members June 2018BDO Center for Corporate Governance and Financial Reporting May 2018GDPR: What Plan Sponsors Need to Know About The EU’s New Data Protection Rules May 2018Advancing Financial Reporting – Perspectives of the SEC Chief Accountant May 2018
For a complete listing of BDO publications, refer to: https://www.bdo.com/insights/
88
BDO BOARD GOVERNANCEPublications
Title DateCarpe Diem! Accelerating Defined Benefit Funding to the 2017 Tax Year Can Generate Tax Savings May 2018
Significant Accounting & Reporting Matters – Q1 2018 April 2018Accounting Standard Updates: Effective First Quarter 2018 April 2018New Changes to Trust Services Criteria and SOC 2 Reporting April 2018Audit Committee Requirements Practice Aid (Updated) April 2018PCAOB Seeks Input into Its 2018-2022 Strategic Planning Through Public Survey April 2018Preparing for the Leases Accounting Standard: A Tool for Audit Committees April 2018Initial Offerings Newsletter – Spring 2018 April 2018Financial Wellbeing Programs: Today’s Tools for a Healthy, Productive Workforce March 2018FASB Issues Technical Corrections & Improvements to its Recent Financial Instruments Guidance March 2018
Countdown to GDPR: How Will the GDPR Affect Information Management? March 2018Non-GAAP Measures - A Roadmap for Audit Committees March 2018Tax Reform and ASC 740: 5 Things You Need to Know March 2018Tax Reform Planning Checklist March 2018For a complete listing of BDO publications, refer to: https://www.bdo.com/insights/
89
BDO BOARD GOVERNANCEPublications
Title DateTax Reform FAQs - Top Questions About the New Tax Law March 2018BDO 2018 Shareholder Meeting Alert March 2018Reclassification of Certain Tax Effects Caused By Tax Reform February 2018SEC SAB 118 Guidance - Changes in Estimates & GILTI Accounting Policy Choice February 2018What CEOs Should Know & Do About Cybersecurity February 2018BDO Cyber Threat Insights Report 2017-2018 February 2018Puzzled by U.S. Tax Reform? February 2018BDO Knows: ASC 740 and U.S. Tax Reform January 2018Top 10 Things Companies Need to Know About Tax Reform January 2018Private Companies and Non-Profit Entities Can Apply SAB 118 January 2018Summary of Key Tax Reform Implications on Accounting Methods January 20182017 Audit Committee Round-Up: Focal Points, Tools & Resources January 2018PCAOB Issues Staff Guidance for Changes to the Auditor's Report January 2018BDO's Tax Reform Resolutions January 2018FASB Accounting Year in Review January 2018
For a complete listing of BDO publications, refer to: https://www.bdo.com/insights/
90
BDO BOARD GOVERNANCEPublications
Title Date2018 BDO IPO Outlook January 2018SEC Year in Review January 2018SEC and Tax Reform – SAS 118 January 2018Compensation and Benefit Programs - Thinking Strategically in the Tax Reform Era January 2018Corporate Tax Reform - Summary of New Laws Taking Effect January 2018
For a complete listing of BDO publications, refer to: https://www.bdo.com/insights/
MIDDLE MARKET M&A & THE CAPITAL MARKETSDecember 5, 2018
Dan SheaBDO Capital Advisors, LLC
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Contents
Economic Landscape Capital Formation M&A Activity Concluding Summary
Appendix - BDO Capital Credentials
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeEquity Markets
Volatility returned to the markets in last 45 days after fairly calm waters since April
Increased volatility should have been expected given issues surrounding raising interest rates, the potential impact of tariffs, and political frictions
The M&A market benefits from stable, growing equity markets
What do recent market movements say of the M&A environment?
U.S. Major Indices
Source: S&P Capital IQ; 1/4/2010 through 11/27/2018
-50.00%
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
Dow Jones Industrial Average (^DJI) - Index Value S&P 500 (^SPX) - Index Value NASDAQ Composite Index (^COMP) - Index Value
2016 2017 YTD Chg Off YTD High
Dow Jones 13.42% 25.08% -0.30% -7.75%
NASDAQ 7.50% 28.24% 1.08% -12.66%
S&P 500 9.54% 19.42% -0.51% -8.48%
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeCorporate Profits
Earnings have continued to expand in recent quarters
S&P 500 quarterly EPS up 18.7% in the last year
Earnings growth is expected to continue The tax cuts have certainly contributed;
however, EBITDA has grown as well, up 13.4% in the last year, indicating that additional value continues to be created
And, given a slightly negative S&P index as of 11/27/18, PE and EBITDA multiples have clearly softened in recent weeks
S&P 500 Quarterly Diluted EPS and EBITDA
Source: S&P Capital IQ
4.0%
18.7%EPS
5.0%
13.4%EBITDA
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeInflation and Employment
Labor is tight, but prices remain calm Trade tariffs are adding pricing
pressure to specific products, but the impact is not yet showing up in headline inflation numbers• Producer Price Index – 0.6% monthly gain
in October, up from 0.2% in September and up 2.9% LTM (down from 3.4% in June)
• Consumer Price Index – 0.3% monthly gain in October, up from 0.1% in September and up 2.5% LTM (down from 2.9% in June and July)
Unemployment declined to 3.7% in October – lowest rate since 1969
Shortages are really problematic Wages are on the rise
U.S. Unemployment Rate
Source: U.S. Bureau of Labor Statistics, 1/1/2011 through 7/31/2018
2%
3%
4%
5%
6%
7%
8%
9%
10%
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
The Fed is walking a fine line to keep inflation under control while not hindering economic growth
Key factors include unemployment, tax cuts, and government spending
Deficit spending has necessitated additional treasury issuances at higher rates demanded by investors
Fed funds rate near zero from 2008 to December 2015 – eight hikes since then (three in 2018) to reach 2.25% now
Future increases expected – one in December and three in 2019
Average Fed rate was 4% in 90s and 00s
Key Interest Rates
Source: The Federal Reserve; 8/1/2006 through 10/11/2018
Economic LandscapeInterest Rates
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
8/1/
2006
1/1/
2007
6/1/
2007
11/1
/200
7
4/1/
2008
9/1/
2008
2/1/
2009
7/1/
2009
12/1
/200
9
5/1/
2010
10/1
/201
0
3/1/
2011
8/1/
2011
1/1/
2012
6/1/
2012
11/1
/201
2
4/1/
2013
9/1/
2013
2/1/
2014
7/1/
2014
12/1
/201
4
5/1/
2015
10/1
/201
5
3/1/
2016
8/1/
2016
1/1/
2017
6/1/
2017
11/1
/201
7
4/1/
2018
9/1/
2018
LIBOR - 3 Month U.S. Treasury - 10 Year Prime Rate
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeGDP
Economic growth is a very important influencer of investment, valuation, and overall sentiment
Higher growth and more stability seen in recent quarters• Q3 at 3.5%, although down from Q2• The tax cuts have impacted consumer
and business buying and investment behavior in recent quarters
• Analysts predict further slow down due to impact of tariffs, moderating business and consumer spending, lower oil prices
The U.S. is the economic high ground – attracting investors/buyers from all over the world
Source: U.S. Bureau of Economic AnalysisNote: Q4’18 through Q3’19 are estimates provided by The Wall Street Journal
U.S. GDP Growth Rate
-1.0%
2.9%
-0.1%
4.7%
3.2%
1.7%
0.5%0.5%
3.6%
0.5%
3.2% 3.2%
-1.0%
5.1%4.9%
1.9%
3.3% 3.3%
1.0%
0.4%
1.5%
2.3%1.9%
1.8%1.8%
3.0%2.8%
2.3% 2.2%
4.2%3.5%
2.7%2.5%
2.5%2.2%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeManufacturing Base Continues to Expand
The ISM PMI surveys the economic health of our manufacturing sector monthly based on new orders, inventory levels, production, supplier deliveries, and employment
The U.S. manufacturing sector continues to expand, reading 57.7 in October• 114 consecutive months of expansion• Demand remains moderately strong• Consumption is softening • Production and employment continue to expand
in spite of labor and material shortages
Of the 18 manufacturing sectors followed, 13 reported growth
Source: ISM (Institute for Supply Management) Report on Business; July 2018
30
35
40
45
50
55
60
65
70
U.S. ISM Purchasing Managers Index (PMI)
Contraction
Expansion
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Economic LandscapeConsumers are Upbeat
Consumers are still feeling good • UM survey came in at 97.5 for November
2018, down from an October reading of 98.3, influenced in part by stock market volatility. The reading is 0.9 points below the LTM average and 11.0 points above the 66 year average
• Public perceptions about the economy have eased since the March reading of 101.4 (the highest since Jan 2004) but the data remains upbeat overall.
Source: University of Michigan: Consumer Sentiment Index; Jan 2005 to Nov 2018
U.S. Consumer Sentiment
0
20
40
60
80
100
120
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Contents
Economic Landscape Capital Formation M&A Activity Concluding Summary
Appendix - BDO Capital Credentials
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Capital FormationPE Capital Reserve Balance Remains High
There are 3,000+ firms looking to raise new funds currently, up 52% in a year
PE firms have approximately $1T of dry powder globally, or 4+ years on hand and about 7% above YE 2017• ~45% is North America-focused• ~80% is buyout and growth oriented
The run-up in dry powder is attributed to: • Strong showings from mega-funds• Increasing focus on Asia • Challenges putting money to work in a
competitive, high valuation market
Exits have been easier - 471 in Q2 totaling $103B (highest since Q3 2015)
VCs made 3,628 investments in Q2, totaling $73B (a new record)
PE returns in mid-teens on average –buyouts much higher than VC
Private Equity Capital Overhang ($B)
Source: Preqin
$365 $430 $445 $470 $510$630 $625
$105$105 $115 $125
$160
$180 $205
$60$95 $80
$95$110
$140$180
$0
$200
$400
$600
$800
$1,000
2012 2013 2014 2015 2016 2017 2018
Buyout VC Growth
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Capital FormationIPO Issuance
136 companies went public during 1H 2018, raising $37.72B • Volume on track to surpass 2017 ($52.22B
raised) • Average IPO size was $277B, up 24% from
1H 2017 • Tech accounted for ~16% of capital raised
• 80% of those had negative earnings*• PACs accounted for ~15% of capital
raised
Q3 volume at 50+ and Q4 pipeline looks good
U.S. IPO Issuance
Source: Bloomberg News
311
217
143
233
136
0
50
100
150
200
250
300
350
$0
$20
$40
$60
$80
$100
$120
2014 2015 2016 2017 Jun-18
$B Raised # IPOs
*Wall Street Journal, October 2, 2018
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Capital FormationDebt is Readily Available for Transactions
Access to debt financing is allowing financial buyers to utilize greater leverage with the intent to increase overall returns
Borrower conservatism is starting to show• Debt/EBITDA for lower middle-market PE deals currently stands at ~3.9x, down from 4.2x in
Q2 • Equity contribution to total capital structure currently in low 40%s on average
Subordinated debt as a portion of overall contributions remains relatively unchanged (at ~ 1.0x EBITDA)
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Contents
Economic Landscape Capital Formation M&A Activity Concluding Summary
Appendix - BDO Capital Credentials
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityCurrent Auction Environment – PROJECT X
The Company• Project X, a privately held business based in North America, is a
leading manufacturer of industrial products
The Transaction Process• 112 potential strategic and financial buyers were contacted• 75 potential buyers executed NDAs and received the offering
materials• 29 initial offers (indications letters) were received• 12 participated in preliminary due diligence• 5 LOIs were received• Strategic foreign buyer selected
The Outcome• ~$100M EV, ~10.0x EBITDA• Final purchase price was 28% higher than buyer’s original offer• Final FY EBITDA multiple was 2.1x higher than buyer’s original offer • Significant concessions regarding legal terms/conditions, employment
agreements, etc.
ProjectX
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityCurrent Auction Environment – PROJECT X
Indications of Interest (29)
Closing Price+46%
Above Median IOI Offer
100%
118% 120%130%
140%148% 151% 152% 154% 157%
171% 173%185% 188%
195% 200% 203%211% 214% 215% 215% 215% 215% 217% 221% 223% 223% 223%
249%
285%
80%
100%
120%
140%
160%
180%
200%
220%
240%
260%
280%
300%
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityVolume by Deal Size
Middle market (EV of less than $500M) transaction representation is as follows:• EV < $100M made up ~73% (a decline from 78% in last year)• EV between $100M and $250M made up >12% of this activity
Continued attraction to lower middle market businesses
0%
20%
40%
60%
80%
100%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2014 2015 2016 2017 2018
Under $100M $100M-$250M $250M-$500M
Source: S&P Capital IQ; 1/1/2000 through 3/31/2018
U.S. M&A Activity
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityForeign Buyer Interest
Foreign buyers play a substantial role in U.S. M&A activity• Valuations by foreign buyers continue to
be very competitive• The strong dollar has not deterred
interest in recent years• The U.S. remains the economic high
ground• U.S. companies like their suppliers
physically close to local operations –spurring foreign buyers to acquire U.S. based operations
Foreign Buyer Activity
Note: Publicly disclosed M&A transactionsSource: S&P Capital IQMiddle Market is defined as deals with an EV of < $500M
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 '17 Q2 '18
Transactions with Foreign Buyers
Foreign Buyers as % of Total Transactions
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityStrategic vs PE Buyer Closings
PE buyers play a substantial role in U.S. M&A activity
Fueled by dry powder, access to debt, and attractive growth prospects of target companies, PE buyers have been stretching valuations and winning auctions• They are investing in white papers,
consultants, and operating partners with greater frequency
• They are also specializing by industry
Strategic buyer activity has reached an 11-year low (share of deals) in part due to competition from PE firms
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Strategics PEGs
Source: S&P Capital IQ; 1/1/2000 through 6/30/2018
Private Equity vs. Strategic, Total Deals
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivitySignificance of Add-Ons
Add-on transactions continue to make up a larger share of U.S. M&A activity, especially in the middle market
Add-ons can be a great means to supercharge valuation, thereby helping to justify the high price of platform investments 1,
055 1,49
1
1,12
7
788 1,
188
1,40
0
1,57
7
1,51
2 1,98
2
2,07
7
2,12
7
2,11
2
1,01
6
1,21
3
1,39
4
1,02
9
607
931 1,
016 1,
178
976
1,17
6
1,24
5
1,17
6 1,21
0
519
0%
10%
20%
30%
40%
50%
60%
70%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Non Add-on Add-on Add-On % of Buyout
U.S. M&A Add-on Activity
Source: PitchBook; 1/1/2006 through 6/30/2018*2018 data as of 6/30/2018
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityPE Hold Periods
Holding periods lower modestly, but remain relatively long
Assets held for less than three years made up approximately 20% of buyout-backed investments exited
Assets held for three to five years growing as a percentage of total buyout-backed investments exited 0
1
2
3
4
5
6
7
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0 - 3 years 3 - 5 years Greater than 5 years Median holding period (years)
Distribution of Global Buyout-Backed Investments Exited
Source: Preqin; 1/1/2005 through 12/31/2017
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityAggregate Value and Volume by Deal Size
Political and policy insecurities explain recent downward trend• Causing some seller hesitation – it remains a sellers’ market though
Middle Market M&A Activity
Note: Publicly disclosed M&A transactionsSource: PitchBook, 1/1/2012 through 6/30/2018Middle Market is defined as deals with an EV of < $500M
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
0
5,000
10,000
15,000
20,000
25,000
30,000
2012 2013 2014 2015 2016 2017 1H 2017 1H 2018
Under $100M $100M-$250M $250M-$500M Total Transaction Value ($B)
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityValuation Multiples
M&A markets result in cyclical pricing – growth prospects, buyer appetite and quality/mix of companies sold are key determinants of the average multiple in a given period
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD*2018
Median EV/EBITDA 8.4x 8.0x 8.2x 7.9x 8.7x 10.2x 9.0x 9.8x 9.9x 7.5x 8.9x 9.2x 8.3x 9.3x 9.2x 8.5x 8.5x 9.3x 9.3x% Change YOY -5% 2% -3% 10% 17% -12% 9% 1% -24% 18% 4% -10% 13% -2% -8% 1% 9% 0%
8.4x
8.0x8.2x
7.9x
8.7x
10.2x
9.0x
9.8x 9.9x
7.5x
8.9x
9.2x
8.3x
9.3x 9.2x
8.5x8.5x
9.3x 9.3x
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
EV/E
BITD
A
U.S. Historic EV/EBITDA Multiples
Source: S&P Capital IQ; Represents closed deals valued < $500M with EV/EBITDA multiples between 3x and 20x *YTD through 6/30/2018
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
M&A ActivityMultiples and Volume Share by Industry Sector
There is variability between various sectors of the economy Consumer Discretionary and Industrials are currently the most active industries with
respect to middle market M&A activity
LTM EBITDA Multiples by Sector (<$500M) LTM Deal Count by Sector (<$500M)
Source: S&P Capital IQ; represents LTM period through 7/31/2018
8.6x9.6x
3.9x
7.6x 7.5x
9.1x8.0x
6.6x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
22%
20%
17%
12%
14%
7%
7%
1% Consumer Discretionary
Industrials
Information Technology
Healthcare
Materials
Consumer Staples
Energy
TelecommunicationServices
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
Contents
• Economic Landscape• Capital Formation• M&A Activity• Concluding Summary
Appendix - BDO Capital Credentials
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
CONCLUDING SUMMARYCorporate Profitability + Cash-Flush Market + Aging Population = Ideal M&A Environment
The stock market is sending a signal
Earnings and general economy remain strong, but signs of softening are appearing
Companies are flush with cash, and have access to attractive debt financing in a record low interest rate environment
• Non-financial companies hold approximately $2.4 trillion in liquid assets
• Private equity has record level of dry powder $1T+
• Capital available for acquisitions, organic growth, dividends, and share repurchases
A majority of privately-held businesses in the U.S. are owned by Baby Boomers, a population of 71 million, the youngest of whom are now 54 years old
Short of economic calamity, deal activity should be relatively high and valuations should remain at higher end of historical norms
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
CONTENTS
Economic Landscape Capital Formation M&A Activity Concluding Summary
Appendix - BDO Capital Credentials
BDO Capital Advisors, LLC Member FINRA/SIPCBDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm.
CredentialsRecent BDO Capital Advisors Transactions
BDO Capital Advisors, LLC, a wholly-owned affiliate of BDO USA, LLP, is a leading middle market investment bank that focuses on sell-side advisory, acquisition advisory, capital raising and board advisory services with offices located throughout the United States. The firm has deep industry knowledge, extensive cross-border transaction experience and superior execution capabilities. The firm has broad industry expertise and contacts having closed transactions within the Manufacturing & Distribution, Consumer, Food & Retail, Healthcare & Life Sciences, Business Services, Energy & Natural Resources and Technology, Media & Telecom sectors. Our seasoned investment bankers have collectively advised on hundreds of transactions for a variety of clients including family-owned businesses, entrepreneur-led companies, public corporations and leading private equity firms. Our professionals also draw upon the full depth and breadth of BDO USA’s national resources which include 60+ offices and over 6,500 professionals located throughout the United States.
The firm has worldwide access to buyers, sellers and offshore investors via the Corporate Finance practices of BDO International’s network of independent member firms which have been ranked collectively as a Top 10 global M&A mid-market advisor based on total deal volume announced in 2017, according to Thomson Reuters SDC. BDO International Corporate Finance firms operate in approximately 100 countries with over 2,000 professionals who are able to meet the investment banking needs of clients across the globe. For more information please visit: www.bdocap.com.
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 650 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of more than 73,800 people working out of 1,500 offices across 162 countries.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.
BDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA, LLP, a Delaware limited liability partnership and national professional services firm. BDO Capital Advisors, LLC is a FINRA/SIPC member firm.
This material (including market commentary, market data, observations or the like) has been prepared by personnel within BDO Capital Advisors, LLC (“BDO Capital”). It has not been reviewed, endorsed or otherwise approved by, and is not a work product of, any research department of BDO USA, LLP (“BDO”). Any views or opinions expressed herein are solely those of the individual authors and may differ from the views and opinions expressed by other departments or divisions of BDO. This material is for general information purposes only. This material is proprietary and confidential to BDO Capital and is for your personal use only. Any distribution, copy, reprints and/or forward to others is strictly prohibited. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute investment, legal or tax advice, nor does it constitute an offer or solicitation for the purchase or sale of any financial instrument or a recommendation for any investment product or strategy. Information contained in this material has been obtained from sources believed to be reliable but no representation or warranty is made by BDO Capital as to the quality, completeness, accuracy, fitness for a particular purpose or non-infringement of such information. In no event shall BDO Capital be liable (whether in contract, tort, equity or otherwise) for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction. All information contained herein is as of the date referenced and is subject to change without notice.
© 2018 BDO Capital Advisors, LLC. All rights reserved. www.bdocap.com
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 550 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 73,800 people working out of 1,500 offices across 162 countries.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.
Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.
© 2018 BDO USA, LLP. All rights reserved.
