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Boris J. Steffen publishes article on valuation and solvency analysis in failing firm claims in Financier Worldwide.
WASHINGTON, D.C., May 8, 2008—Boris J.
Steffen, Bates White Partner, recently published an article titled “Valuation and Solvency Analysis in Failing Firm Claims” in Financier Worldwide’s April e-book on international mergers and acquisitions. The article presents an innovative methodology to assist firms in achieving antitrust clearance for their M&A transactions. In particular, the methodology described by Mr. Steffen adapts the tools of solvency and valuation analysis used under the U.S. Bankruptcy Code to the DOJ/FTC’s Merger Guidelines “failing company” and “failing division” defenses.
The Merger Guidelines sets forth that a merger is not likely to create market power if one company is a “failing company” in the sense that it cannot meet its debts and its assets will presumably exit the market absent the merger. Given this logic, Mr. Steffen examines the Guidelines’ “failing company” defense within a bankruptcy context and discusses how analyses such as the balance sheet, adequate capital, and cash flow (also known as the ability-to-pay test) can provide a relevant and reliable framework for use in addressing failing firm claims.
Properly applied, this approach can assist acquirers in achieving antitrust clearance for a transaction that may otherwise be blocked. While a blocked transaction is likely significant in any event, it is particularly prohibitive in today’s environment of tightening credit markets, leveraged capital structures, and economic uncertainty.
To read the article, visit http://www.bateswhite.com/news/pdf/
FW_Valuation_Solvency_Analysis_Steffen.pdf.
Mr. Steffen’s practice provides litigation support and expert testimony to assist Fortune 500 corporations, government agencies, and law firms in resolving accounting, corporate finance, solvency, and valuation related disputes. Mr. Steffen has advised or testified in antitrust, bankruptcy, contract, intellectual property, M&A, and securities litigation in transactions valued in excess of $100 billion. In hearings before the New Jersey Board of Public Utilities, he testified on synergies expected in Exelon Corp.’s proposed acquisition of Public Service Enterprise Group, Inc.
About Bates White
Bates White is a consulting firm offering services in economics, finance, and business strategy to leading law firms,
Fortune 500 companies, and government agencies. We provide our clients with a unique combination of quantitative and
analytical expertise, and an understanding of business issues across a range of industries. Bates White has offices
in Washington, D.C., and San Diego, Calif.
For more information, visit: www.bateswhite.com
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