Considering Corporate Finance Column Archive

• More States may Remove Corporate Tax Shelters (April 18, 2007)
  Tax policy research recently released reveals more states are poised to remove interstate subsidiary tax shelters by mandating combined reporting.... more

• Know Thy Investor: Increasing Leverage and Changing Investor Base Brings Challenges (February 28, 2007)
  Changing dynamics in the loan market have led to a resurgence of leveraged and cash flow loans. With increased leverage corporates should proceed cautiously in a market driven by new investors.... more

• Shareholder Rights Concerns May Dampen U.S. Equity Market Competitiveness (January 24, 2007)
  The ongoing shareholders rights debate reveals that a dearth and a plethora of shareholder protection regulations may be equally harmful to U.S. equity market competitiveness.... more

• Euro-Denominated Outstanding Debt Outpaced US Dollar Debt in 2006 (January 17, 2007 )
  U. S. dollar-denominated outstanding debt ranked second to the Euro for the second year running as broad and deep Eurozone debt markets flourish. ... more

• Leveraged Deals Revitalize Bondholder Protection Covenants (December 20, 2006)
  Bondholders in recent-record breaking leveraged deal activity are refocusing on covenants to help protect against transaction related event risk.... more

• Payment-in-Kind Financing May Not Fare Well in an Uneasy Debt Market (December 13, 2006)
  A spate of recent high-yield deals took advantage of strong new debt demand to issue flexible payment debt instruments. However, as debt markets show signs of uneasiness, these instruments may be harder to... more

• Inverted Treasury Yield Curve May Soon Revert to Typical Shape (December 6, 2006)
  Economic and market data over the past few weeks reflect a possible return to a more typically shaped Treasury yield curve in early 2007.... more

• Record Deal Size and Free Flowing Credit Keep M&A Boom Afloat (November 22, 2006)
  Strong merger and acquisition (M&A) deal activity this Monday reflects a hot market fueled by large private equity participation and a market willing to devour mounds of speculative-grade debt. ... more

• Single-Name Cash Settlement Improves CDS Usefulness to Non-Financial Companies (November 9, 2006)
  ISDA recently released a new protocol to facilitate settlement of credit derivative trades involving Rochester Hills, MI-based Dura Operating Corporation. The protocol may open the way for more non-financial... more

• Regulators Attempt to Map Instability Factors in Global Financial Markets (November 8, 2006)
  The build-up of highly leveraged global deals driven largely by private equity firms has raised concerns about future market stability. Increased credit market activity around these deals further complicates... more

• US Leads In Global Research and Development Spending (November 1, 2006)
  A UK Government trade department recently released study shows that the US leads in global research and development (R&D) spending. Not surprisingly, strong growth in spending was seen in investment intensive companies... more

• S&P Proposes Increasing Recovery Weights in Issue Ratings (October 25, 2006)
  S&P recently issued a request for comment on their proposed expansion and increased weighting of recovery rates in issue ratings.... more

• Government Reports Contradict on Need for TRIA Extension (October 18, 2006)
  Reports recently released by the US Government Accountability Office (GAO) and the President's Working Group on Financial Markets (PWG) vary on the need to extend the Terrorism Risk Insurance Act (TRIA) before its 2007 expiration.... more

• Acquisition Announcements and Speculation Help Equities Market Brush-Off Mixed Economic News (October 11, 2006)
  Equities through Monday continued to rally as large takeover deals were announced or speculated amid indication that near-term corporate earnings will slow.... more

• Global Debt Issuance Breaks Three-Quarter Record Despite Slight Slowdown (October 4, 2006)
  Riding high from first-quarter volume, the global debt market in the first three quarters of 2006 reached a record-breaking $5.0 trillion even as third quarter... more

• Moody's Proposes Addition of Covenant Assessment to Ratings Process (September 27, 2006)
  Moody's Investor Services this fall plans to introduce a new covenant assessment plan for non-financial corporate issuers, citing event risk related to a lack of meaningful covenants in bond indentures... more

• Strong Technology Deal Volume Evokes Bubble-Fear Once Again (September 20, 2006)
  Deal volume this week returns from summer break and recovers from early September back-to-school blues with strong activity from the technology sector. Deal announcements and calendar lineups are strong in the sector that... more

• Pending SEC Revision of Shareholder Nomination Rules May Open Proxy Access (September 13, 2006)
  A US Court last week ruled in favor of a shareholder in its fight to include board nominations in official proxy material. Comments from the court ruling prompted a US Securities and Exchange Commission (SEC) review that may... more

• Questions of Insider Trading May Increase CDS Market Regulation (September 5, 2006)
  Traders in the credit default swap (CDS) market in recent months drove spreads up in certain names in advance of the public release of acquisitions and debt issuance news. This activity has raised concerns that trading... more

• Hybrid Market Sees a Rebound Ahead of New NAIC Clarifications (August 16, 2006)
  The US hybrid security market last month staged a rebound from its post-NAIC ruling retreat with new issuances by financial services companies.... more

• Compliance Concerns Not the Only Factor Favoring Overseas IPOs (August 9, 2006)
  U.S. Representative Tom Feeney (R - FL) last week warned that the rigors of corporate compliance are pushing companies to issue on non-US exchanges. Interestingly, a recent report revealed that other factors... more

• Stock Option Timing May Back Over High Tech and High Yield Companies (August 2, 2006)
  The stock option back-dating story has had strong staying power in recent weeks while securities investigations and shareholder inquiries impact stock prices, augmenting high technology company target attractiveness... more

• Differing Opinions On TRIA Need--Catastrophe Bonds May Be The Answer (July 26, 2006)
  Treasury Secretary Henry Paulson during June confirmation hearings said the need for the Terrorism Risk Insurance Act (TRIA) is not as obvious as it was a year ago. At the same time, representatives of the insurance... more

• Debt Holders vs. Equity Holders: Scores Shift In The Old Game (July 19, 2006)
  Fixed-income institutional investor research released Monday reflects worries that corporate management's favoring of equity holders is increasing company risk at... more

• Venture Capital Sees Strong Q2 M&A And IPO Activity (July 12, 2006 )
  Venture capital firms during the second quarter were staging a near return to their glory day activity thanks to large increases in venture-backed companies going out and strong levels of mergers and acquisitions (M&A). ... more

• NAIC SVO Hybrid Securities Classification Determinations Status Update (July 5, 2006)
  Recent National Association of Insurance Commissioners (NAIC) Securities Valuation Office (SVO) determinations classified certain hybrid securities as common stock in insurers' portfolios, prompting a slow down in new hybrid issuances... more

• Summer M&A Sizzles - Some Like It Hot (June 28, 2006)
  Corporate dealmakers this week announced more than $100 billion worth of deals as the largest M&A year on record swelters, either in a heated dash for the Hamptons or an indication that deal levels may boil... more

• M&A Deals Do Not Realize Expected Value As Cross-Border Deals Increase (June 21, 2006)
  Executives in a recent survey reported that M&A deals miss the mark in achieving expected value as global deal volume continues to be driven by executives' efforts to create at least more value than their competitors... more

• NAIC Delays Hybrid Securities Classifications Decision (June 14, 2006)
  The NAIC on Sunday announced the delay of a decision regarding the SVO classification of hybrid securities in a move that may steady the market for existing hybrids, but likely will not entice new issuances... more

• Stock Buyback Activity Continues To Soak Up Excess Cash (June 14, 2006)
  Stock buyback activity increased through the first quarter as high levels of excess cash are put to work furthering the share count reduction trend... more

• Prepare Investor Relations Strategies Before Activist Hedge Fund Actions Flare Up (June 6, 2006)
  Hedge fund Pirate Capital LLC last Thursday, as part of the latest acts of hedge fund activism, released a statement that Mirant Corp. should put itself up for sale after Mirant's failed bid to acquire competitor... more

• The Price Of A Burger In China Revisited (May 31, 2006)
  The latest Big Mac Burger Index released last week by the Economist shows the Renminbi Yuan (CNY) continues to be undervalued against the U.S. Dollar (USD) as the debate continues over the Chinese government as... more

• Recent NAIC SVO Hybrid Securities Classifications May Further Slow New Issuances (May 24, 2006)
  The latest Securities Valuation Office report last week that certain hybrid securities should be classified as common stock in insurers' portfolios broadens concerns that new hybrid issuances will cool-off amid the market's push to complete... more

• Former Gemstar Executives Get Punished For Committing Fraud While Former Enron Executives Wait (May 10, 2006)
  Former Gemstar CEO Monday was fined $22.4 million and permanently restricted from public company officer or director roles in one of the largest civil judgments levied against an executive accused of... more

• Driving Performance, Corporate Finance Departments Look To Simplification and Standardization (May 3, 2006)
  A survey of top executives released in April revealed that corporate finance departments are not often perceived to be outstandingly competitive in regard to performance and effectiveness, particularly... more

• Stapled Financing Loosens As M&A Deal Flow Reacts To Potential Conflicts Of Interest (April 12, 2006)
  The Delaware Chancery Court comments last summer related to alleged conflicts associated with the Toys R Us leveraged buyout helped loosen the use of stapled financing in deal flow since the hearing. ... more

• Credit Derivatives Market Activity--March Madness Wasn't Just On the Court (April 5, 2006)
  The credit derivatives market in March was very active with global credit default swap (CDS) trading branching out into new names while the North American automotive and European telecommunications industries reflected... more

• "Go Shop" -- When A Done Deal Isn't A Done Deal (March 29, 2006)
  Mergers and acquisitions deal terms over the last year have decreased the certainty that a given deal will complete -- leaving no deal final until the check is cut, management moves in and company names change. ... more

• Hybrid Securities Market Digesting New Equity Classification Decision (March 22, 2006)
  The Securities Valuation Office decision last week that certain hybrid securities should be classified as common stock in insurers' portfolios made waves in the hybrid securities market.... more

• Latest Commitments By 'Fourteen Families' Pleases NY Fed (March 15, 2006)
  The "Fourteen Families" submitted their latest commitments to improve credit derivatives support infrastructure to strong approval of the Federal Reserve Bank of New York on Friday... more

• Exchange Deal Creating New Scope For The Big Board, Open-Outcry Cries On Its Screens (March 8, 2006)
  Our classic image of the New York Stock Exchange - screaming traders in ill-fitted brightly colored jackets, the world of Gordon Gekko - may soon be recognizable only on the big screen, as the old institution... more

• Politics, Protectionism And Security Fears Threaten Cross-Border M&A (March 1, 2006)
  Congressmen from both parties threatened to block Dubai Ports World (DP World) this month from buying Peninsular & Oriental Steam Navigation Co.’s operations, as other cross-border deals face similar... more

• The 'Fourteen Families' Attempt To Clean Credit Derivative House—Before The Feds Arrive (February 22, 2006)
  The Federal Reserve Bank of New York last Thursday convened a meeting of 14 major credit derivative market participants and 15 supervisory organizations to address the backlog of trade confirmation documentation... more

• Old Chums Tussle Over Tax Code (February 15, 2006)
  On the playground that is global trade, the big kids (think China) often run roughshod over the smaller ones, bending the rules to fit their agendas.... more

• Bank Industry Consolidation Warming Again In Europe, But Targets May Be Too Thin (February 8, 2006)
  The French-based BNP Paribas' bid last Friday for Italian-based Banca Nazionale del Lavoro seems to indicate European bank industry consolidation is heating up again. If the deal is successful, the BNP bid—valued last Friday at... more

• Hedge Fund Managers See New Risk: Regulation (February 1, 2006)
  February heralds a new controversial era of hedge fund regulation as the investment vehicles continue to grow in market volume and importance to the big and average investor alike. ... more

• Yields May Go Higher With Strong Treasury Supply (January 10, 2006)
  The U.S. Treasury Department on Monday announced a heavy January supply that may challenge investor demand and raise yields.... more

• Strong Credit Derivatives Market In 2005 Reflects Troubled Industries (December 28, 2005)
  The credit derivatives market in 2005 was very active with strong North American credit default swap (CDS) trading in heavily bruised names such as GMAC, Ford, GM, Visteon and Delphi, according to a recent ranking by credit derivatives... more

• Protecting Sales Price During A Divestiture - Part II (November 30, 2005)
  Divestitures are the less glamorous side of Merger & Acquisitions (M&A) activities. Each divestiture transaction is different and involves unique situations that require proactive planning and analysis. Before a divestiture ... more

• Protecting Sales Price During A Divestiture - Part I (November 23, 2005)
  Divestitures are the less glamorous side of Merger & Acquisitions (M&A) activities. Each divestiture transaction is different and involves unique situations that require proactive planning and analysis. Before a divestiture of a... more

• Energy Price Increases Spike Producer Prices And Inflation Worries (October 19, 2005)
  Rising energy costs have driven input prices higher at rates not seen in 15 years. That was the key finding from the US Department of Labor September's producer price data, released Tuesday by the department's Bureau of Labor Statistics... more

• Finance Leadership Should Lead Strategic Risk Management (September 28, 2005)
  Hurricanes Katrina and Rita this season disrupted businesses and economies, both locally and globally, focusing many in treasury and finance on their business continuity and disaster recovery plans. Rightfully so, but what ... more

• Financial Accounting Standards Continue To Discourage Risk Management Vehicles (September 21, 2005)
  The Federal Home Loan Banks over the summer have been pressured by the Securities and Exchange Commission (SEC) to comply with Financial Accounting Standard (FAS) 133 in another example of the complexity of reporting ... more

• Regulation May Lead To One-Size Swap Products, But They Do Not Fit All (September 14, 2005)
  The Senate Banking Committee last Thursday heard testimony regarding pending legislation that would reauthorize the Commodity Exchange Act and potentially broaden the jurisdiction of the Commodities Futures Trading Commission (CFTC) over ... more

• Dancing Around A Looming Yield Curve Inversion (September 7, 2005)
  The Treasury bond market's four-week rally last month, driven by the potential economic impact of higher oil prices, came close to inverting the Treasury yield curve as pricing pressures oscillated up and down. ... more

• Would You Give Someone A Blank Check? (August 31, 2005)
  Chasing a limited amount of quarry, some investors have been writing blank checks. Though private equity and hedge funds seem to dominate the overall investment market, investors have seen an increase in initial public ... more

• Citigroup Continues Divestiture Trend (August 24, 2005)
  As financial services firms continue to refocus, Citigroup agreed last month to swap its worldwide asset management wing for Legg Mason's private client brokerage and capital markets business. ... more

• Investor Relations: Lessons Learned The Hard Way (August 3, 2005)
  Semiconductor giant Altera Corp. apologized last week to Tad LaFountain for a snubbing the Wall Street tech analyst said was retaliatory for negative reports on the company's shares. ... more

• Financial Accounting Reporting Method Changes May Impact Credit Relationships (July 27, 2005)
  Financial accounting standards continue to evolve, either through direct regulatory action or de facto rule setting by accounting firms, but analyst and users of financial information may not be adopting new methods at the ... more

• What Do Fair Exchange Rates Have To Do With The Price Of Burgers In China? (July 20, 2005)
  Treasury Secretary John Snow at the end of last month told Senators Graham and Schumer that the administration anticipates an August revaluation of China's renminbi yuan in advance of China President Hu Jintao's September Washington visit. ... more

• The Global Savings Glut Theory (July 13, 2005)
  The global savings glut is said to be responsible for everything from excess production capacity in China to the reported real estate overvaluations in Spain, from the U.S. current account deficit to the flat U.S. Treasury ... more

• Global Demand Rises For Corporate Governance Indices (June 29, 2005)
  Corporate scandals and emerging market corporate governance concerns have lead to an increase in the use of global good-company guideposts, adding new complexity to the investor relations function. ... more

• Chinese Companies Continue To Look Abroad For Acquisitions (June 21, 2005)
  Maytag Corporation on Tuesday said in a company release that a consortium led by Chinese appliance maker Qingdao Haier has made an offer to buy all outstanding Maytag stock for $16 per share.... more

• Is The Convertible Bond Market Ready For New Issues? (June 15, 2005)
  The convertible bond secondary market has shown signs of life in the early part of June, spawning optimism that the market might be ready for new issuances. Many believe hedge fund tactics squelched the convertible bond primary market by scaring off issuers.... more

• Investor Risk Threshold Rises As Bond Yields Fall (June 12, 2005)
  Investors earlier this month returned to junk-rated corporate bonds as Treasury yields continue to fall in opposition to the Fed's direction. The 10-year Treasury yield lately has been near 14-month lows prompting some ... more

• Will European Cross-Border Bank Consolidation Take Off? (June 1, 2005)
  EU regulators on Monday forced Italian-based Unicredito Italiano SpA and German-based HVB Group AG to confirm that the two firms are in merger talks, spawning great speculation of a large wave of European cross-border bank consolidation.... more

• Stock Buybacks Are Back As Cash Continues To Grow (May 25, 2005)
  After a small break in the first half of the year, company stock buyback announcements have increased, reflecting a potential lack of corporate executive confidence in long-run economic prospects for their big piles of cash. ... more

• U.S. Treasury Encourages China To Proceed With Steps To Float Currency (May 21, 2005)
  In a semiannual report released Tuesday, Treasury urged China to continue steps toward a flexible exchange of the Renminbi yuan. The report reinforces political pressures from U.S. workers and businesses—as well as global economists—applied to the China trade issue.... more

• Deal Activity On The Rise (May 11, 2005)
  Deal activity continues to increase as Wall Street works through its lineup of M&A, IPOs and divestitures in the few months before the summertime rush to the Hamptons. The big deal out of the block this week revives the spark in domestic power industry consolidation... more

• Verizon-MCI Deal: Is It A Winner's Curse? (May 4, 2005)
  The three month war for MCI ended on Monday when Verizon's takeover offer was accepted over Qwest Communications larger bid amid skillful Wall Street wrangling and often caustic public relations assaults. Though defying a basic theory of shareholder value, MCI accepted the $8.5 billion advances of lower bidder New York-based Verizon Communications Inc. ... more

• Convertible Bond Hedge Funds Losing Ground (April 27, 2005)
  The convertible bond market lately appears to be reaching for new lows, bringing about large losses for hedge funds that have recently taken control. Convertible bonds have been used by many hedge funds to reap high returns and compete in a field where increasingly larger players are suiting up.... more

• The Not So Sinkable U.S. Dollar (April 20, 2005)
  The weakening dollar saga has been the subject of a great deal of debate in international economic circles. Some argue that gentle movements on a wavy voyage are prompting speculation of a Titanic size retreat in the U.S. economic expansion.... more

• Will The Lights Go Out On Global Economic Recovery? (April 13, 2005)
  Though the world basks in the glow of a seemingly endless but unreachable supply of energy, some analysts say our oil-based economy might be heading for a permanent shock. The International Monetary Fund (IMF) warned this month of a permanent shock strong enough to throw ... more

• Corporate Ethics-Better Or Worse Than The Past? (April 6, 2005)
  With the business pages reading like the local crime blotter, several notorious corporate criminals have built some serious "street credibility" parading past cameras en route to the courtroom.... more

• Reinsurance Draws Regulators From Three Continents (March 30, 2005)
  At the center of a new round of corporate ethics scandals, the global reinsurance industry is cooperating with investigators in multiple domestic and foreign jurisdictions but says its accounting and disclosure practices require no overhaul.... more

• Did Someone Say Private Equity Bubble? (March 23, 2005)
  A Perfect Storm of rising interest rates, increased competition from hedge funds and a prodigious capital overhang from leveraged buyouts (LBO) might blow private equity into a bubble, some say. The private equity market might be headed for a correction in the near future... more

• LBOs: Back to the Future (March 16, 2005)
  The private equity industry is finally taking revenge on Hollywood for the robber-baron depictions of the late 1980s, snatching music and film studios among other trophies of this era. Though some say private equity is reaching a bubble, the industry is doubtlessly feeling confident. ... more

• Smaller Firms "Go Dark" To Avoid Compliance Costs (March 9, 2005)
  Like a squadron of F-117s flying in and out of radar over the American capital markets, smaller firms continue to "go dark" by deregistering from public stock exchanges to elude the high costs of complying with new internal control measures.... more

• Hedge Funds Gain Greater Popularity (March 2, 2005)
  Grown from the zany, more popular little brother of the private equity industry, hedge funds are coming of age as marketers push the instruments to the masses. Boasting more lucrative investment incentives and surpassing the buy-out power of private equity, approximately 9,000 hedge funds represent $1 trillion in assets under management.... more

• Citigroup Ethics Five-Point Recovery Plan (February 23, 2005)
  As part of an effort to refurbish its singed reputation, New York City-based Citigroup announced a "five-point plan" this month to improve internal controls and change its cultural emphasis from short-term profits to long-term fiscal health.... more

• Senate Passes Class Action Reform Bill (February 16, 2005)
  The Senate handed tort-reform proponents a crucial victory last week by passing the Class Action Fairness Act of 2005, causing insurance stocks to buoy the Dow to its highest point of the year.... more

• Bush: How Does My Budget Look In These Jeans? (February 9, 2005)
  Sounding like a mid-winter gym advertisement, President Bush says his "lean" budget "focuses on results." The Administration this week sent Congress a $2.568 trillion budget scheme for fiscal year 2006... more

• Repatriation To Spur M&A (February 2, 2005)
  The American Jobs Creation Act of 2004 was passed on Oct. 24, as a plan to create jobs and grow the American economy. The new law allows corporations holding foreign profits to repatriate this cash for one year ... more

• Restatements: Deja Vu All Over Again? (January 26, 2005)
  With a dramatic 28% rise in restatements last year, financial professionals in this post-Sarbanes-Oxley America have come to resemble the neurotic artist unable to declare his imperfect work of art a finished product—unable to let go.... more

• U.S. Clarifies Earnings Repatriation Law (January 19, 2005)
  As American companies float atop an estimated $2.1 trillion in cash, the government is preparing to spray another $100 billion to $320 billion into the bucket.... more

• The Corporate Governance Movement Today (January 12, 2005)
  Hit with a grenade spewing irony rather than hot metal, the corporate-governance movement was wounded by the news that one of its star propitiators was fighting for the enemy.... more

• A Year of Financial Change (January 5, 2005)
  As the "Curse-reversing, Bush re-electing" year 2004 drew to a close, the United States continued to lead myriad trends in the world economy. Among these trends, American companies engaged in a furious spate of mergers and acquisitions, including big deals in high-tech companies... more