News Flashcards
Blackstone acquisition of Citrin Cooperman
-Hit the news in early January, 2025.
-Blackstone leading a group to purchase majority stake in Citrin Cooperman
-Gives target an enterprise value of $2B
-Stake acquired from New Mountain Capital.
-Blackstone stake under 50% to deal with regulatory concerns re: the audit bus.
-Price was a multiple of 15x EBITDA.
Who owns a majority stake in Grant Thornton?
New Mountain Capital.
What was the first Big 4 firm to seek a law license and where and when?
KPMG in Arizona.
News came out in early January.
In late February, the license was approved by Arizona.
Vialto - what it is and what happened to it in 2024?
A spin off from PwC.
Had to restructure debt loaded on from PE buyout, following a rating agency downgrade.
Pimco and Blackstone were creditors.
Vialto is in the “global mobility” business, providing personal tax, immigration, travel and payroll services to multinational organizations and its employees.
Following an IPO, MDs would receive compensation equal to ___ of firm revenue.
25%
Accenture
The former Anderson Consulting, which went public in 2001.
When did the firm first become “Andersen” after naming rights were purchased?
2019.
What was Arthur Anderson found guilty of regarding the Enron scandals?
When did Arthur Anderson collapse?
Obstruction of justice, for shredding its client’s auditing documents as the government started its investigation.
AA collapsed in 2002 (one year before, it had reported $9B in revenue).
When was Anderson Consulting scheduled to be re-launched?
As soon as February, 2025.
Anderson Global was founded ___ years ago, by _______, originally under the name ____. Its combined annual revenue is about ___.
23 years (so, 2002), Mark Vorsatz, WTAS, $2.5B.
George Shaheen and the new Anderson Consulting.
-Anderson Consulting’s chief executive from 1989-1999.
-Now senior advisor to Anderson.
-He has been coordinating business development for Anderson Global’s new member firms, which the aim of providing a suite of consulting services from strategy advice and It transformation to cyber security and sustainability.
-There are NO plans to compete with Accenture (which is the largest consulting firm by revenue in the world).
-The new AC will not be tied to an audit business.
Neal Livingston
Global CFO at Andersen
Benefits of a corporate roll up strategy
Benefits of a Corporate Roll-Up:
- Cost Savings: Reduced overhead and operational costs through economies of scale.
- Revenue Growth: Increased market share and cross-selling opportunities.
- Improved Efficiency: Streamlined operations and centralized management.
- Enhanced Valuation: A larger, more competitive company may attract higher valuations from investors or potential buyers.
Risks and challenges of a roll up strategy
Risks and Challenges:
- Regulatory Hurdles: Potential antitrust or regulatory challenges, especially if the roll-up leads to significant market concentration.
- Overpayment for Acquisitions: Risk of paying too much for target companies, reducing potential returns.
- Integration Issues: Difficulty in merging different company cultures, systems, and processes.
- Management Complexity: Managing a larger, more complex organization can be challenging.
Example of hypothetical up-reit deal involving John and his $50 million office property.
John decides to contribute his office building to an UPREIT in exchange for operating partnership (OP) units. Here’s how it works:
Contribution to the UPREIT:
John transfers his office building to the operating partnership of a publicly traded REIT (e.g., Realty Income Corporation or Simon Property Group).
In exchange, he receives OP units equivalent to the value of the building ($50 million).
Tax Deferral:
By contributing the property to the UPREIT, John defers paying capital gains taxes on the $40 million gain.
He will only owe taxes when he sells or converts his OP units into REIT shares or cash.
Liquidity and Diversification:
John now holds OP units in a diversified portfolio of real estate assets managed by the REIT.
Over time, he can convert his OP units into publicly traded REIT shares, which he can sell on the open market for liquidity.
Income Stream:
John receives regular distributions from the operating partnership, similar to dividends, providing him with ongoing income.
Estate Planning Benefits:
If John passes away, his heirs may receive a step-up in basis on the OP units, potentially reducing or eliminating the capital gains tax liability.
Hypothetical Case: Real Estate Company IPO
Hypothetical Case: Real Estate Company IPO
Pre-IPO: A real estate company is owned by a group of private investors through an operating partnership (OP). The OP owns a portfolio of commercial properties worth 1 billion,with a tax basis of 500 million.
IPO: The company forms a new C-Corporation (NewCo) and conducts an IPO. NewCo raises $500 million by issuing shares to the public and uses the proceeds to acquire a majority interest in the OP.
Existing Owners: The private investors retain their OP units, which are convertible into shares of NewCo or cash at a later date. They defer taxes on the $500 million of appreciation until they sell or exchange their units.
Post-IPO: NewCo is publicly traded, and the private investors can gradually monetize their OP units over time, subject to lock-up periods and market conditions.
Both an up-REIT and an up-C structure are designed to solve . . .
Both structures are designed to solve the same problem: how to transition to a more liquid or public structure while allowing existing owners to defer taxes on appreciated assets.
What firm is buying CohnReznick and what are the particulars?
-Apax Partners, a PE firm, is in talks to buy CR.
-Apax is London-based.
-Valuation is $2 billion.
-AP and a group of other investors would take a majority stake.
-Apex has also announced plans to purchase Evelyn Partners, an accounting and professional services firm in the UK.
-Reported in Wall Street Journal in late January, 2025.
What are some accounting firms that have taken private equity money since 2021?
Grant Thornton
Baker Tilly
EisnerAmper
Why do PE firms like to buy accounting firms?
Steady recurring revenue from areas such as tax and audit.
Why do PE firms like to buy accounting firms?
Steady recurring revenue from areas such as tax and audit.
When did Andersen Consulting rebrand as Accenture?
2000.
What are the services that George Shaheen thinks Andersen Consulting can provide outside of tax and valuation?
Strategy advice
IT transformation
Cyber security and sustainability
But NOT an outsourcing service provider, which is what Accenture does.
The new Andersen Consulting will also NOT be tied to an audit business, where conflict of interest regulations prevent cross-selling to audit clients.
Which of the big 4 is also focusing on consulting and potentially competing with the new AC?
EY
What year did Arthur Andersen collapse?
2002, after the Enron scandal.
The firm’s downfall was swift and dramatic, primarily due to its involvement in the Enron scandal.
In June 2002, Arthur Andersen LLP was found guilty of obstruction of justice for shredding Enron’s financial documents8.
This conviction led to the Securities and Exchange Commission (SEC) banning the firm from conducting future audits of public organizations7.
As a result, Arthur Andersen filed for bankruptcy in late 2002, effectively ending its operations and transforming the “Big Five” accounting firms into the “Big Four”73.
Total annual revenue of Andersen Global, independent member firms and other affiliates?
$2.5 billion.
What general areas will transaction due diligence cover?
- Financial Statement review
- Management and operations review
- Legal compliance review
- Document and transaction review
First Republic Bank
-Mark thinks this was a great business.
-It was a commercial bank that offered a variety of financial services, including wealth management, private banking and real estate lending for high-net worth individuals and businesses.
-It collapsed in 2023 because of a high-proportion of uninsured deposits, very high loan-to-deposit ratio, exposure to interest rate risks, decline in deposits and struggling mortgage lending business.
When did HSBC own WTAS and when did it sell?
HSBC owned Wealth & Tax Advisory Services (WTAS) until 12/31/07, when HSBC signed and agreement to sell WTAS to participating WTAS Managing Directors, so that MDs now controlled the business.
S-1 filing.
An “S-1 filing” refers to a registration statement (Form S-1) that a company submits to the Securities and Exchange Commission (SEC) when it is planning to go public through an Initial Public Offering (IPO).
It’s essentially the initial step to become a publicly traded company on a stock exchange.
Key points about an S-1 filing:
Purpose: To register securities with the SEC before offering them to the public.
Who files it: Companies looking to go public through an IPO.
Information included: Company overview, business model, financial statements, management team details, risk factors, and planned use of proceeds from the offering.
Access: Once filed, the S-1 document is publicly available on the SEC website, allowing potential investors to review the company’s information before deciding to invest.
Mark thinks Andersen will file its S-1 after meetings among partners in late April of this year.
What is the planned “super voting” allowed for partners post-IPO?
10 votes for every partner share vs. 1 vote for public shareholders share.
In an Up-C deal, how does undistributed income convert to basis?
-In an Up-C deal, undistributed income from the operating partnership generally converts to basis for the public company shareholders when they exchange their partnership interests for shares in the public company, effectively “stepping up” the basis of the underlying assets, which can result in significant tax benefits due to increased depreciation deductions
-This process is often facilitated through a “Tax Receivable Agreement” where the public company agrees to share a portion of the tax savings with the exchanging partners.
Key points about basis conversion in an Up-C deal:
Basis step-up:
When a partner exchanges their interest in the operating partnership for shares in the public company (PubCo), the basis of the underlying assets held by the partnership is typically “stepped up” to the fair market value at the time of the exchange, meaning the PubCo now has a higher basis for those assets, allowing for larger depreciation deductions in the future.
Tax Receivable Agreement (TRA):
To incentivize partners to exchange their interests, the PubCo often enters into a TRA with the partners, which essentially promises to pay a portion of the future tax benefits realized from the stepped-up basis to the exchanging partners.
Impact on tax liability:
The increased basis from the step-up allows the PubCo to deduct more depreciation expense against its taxable income, resulting in lower tax liabilities.
Section 743(b) election:
To ensure the basis step-up occurs, the operating partnership must have a valid Section 754 election in place.
For domestic partners, what percent of shares will be vested when the IPO occurs?
50%, so that partners do not leave.
CBIZ and Marcum.
Deal in 2024, once consummated:
CBIZ COMBINED ANNUAL REVENUE WILL BE ~$2.8B
WILL SOLIDIFY CBIZ’S POSITION AS LEADING PROVIDER OF PROFESSIONAL ADVISORY SERVICES OF ITS KIND
CBIZ WILL BECOME THE SEVENTH-LARGEST ACCOUNTING SERVICES PROVIDER IN THE U.S.
BIZ, Inc. (NYSE: CBZ) (“the Company”), a leading national provider of financial, insurance and advisory services, announced that it has entered into a definitive agreement to acquire the non-attest (aka consulting and related) business of Marcum, LLP (“Marcum”), which will make CBIZ the seventh-largest accounting services provider in the U.S. with approximately $2.8 billion in annual revenue.
Note: “Attest” business includes auditing; “non-attest” is consulting and other non-audit businesses.
What has Andersen’s organic growth rate been recently, what is it expected to be this year, how does that compare to public consulting companies, and why is it so good?
ANDERSEN HAS GROWN ORGRANICALLY AT 18% PER YEAR.
THIS YEAR GOAL IS 16% OR SO.
OTHER CONSULTING COMPANIES: 5% ORGANIC GROWTH. SO, 3X THE GROWTH RATE OF STUDIED PUBLIC COMPANIES. PART OF WHY: FAMILIES ARE A BIG PART OF THE BUSINRESS, AND THEY ARE MUCH MORE RECESSION PROOF.
What’s the multiple of earnings that Mark plans for the IPO?
What is the range he could go out at?
COULD GO OUT AT 32-46X EARNINGS, BUT MARK IS GOING OUT AT 20X. THERE WILL BE PREMIUM INITIALLY OR OVER THE FIRST 30 MONTHS. BOARD ECONOMISTS THINK THIS IS TOO CONSERVATIVE.
What is a Swiss verein?
How does it work?
What are common examples of its use?
A Swiss verein is a legal structure in Switzerland that allows multiple businesses to merge under one brand while keeping their own legal identities. The word verein translates to “union” in English.
How it works
Legal identity: Each member of a verein is a separate legal entity, so their debts and actions are not shared.
Liability: Each member is only liable for their own actions and debts, so the assets of other members are protected.
Profits: Members typically do not share profits or pool revenue.
Uses
Sports clubs
Originally designed for sports clubs, the verein model is still used by many sports clubs today.
Charities
Large-scale charities often use the verein model.
Law firms
Global law firms use the verein model to present a single brand while keeping their member firms separate legal entities.
Non-governmental organizations
International NGOs, such as Amnesty International and the World Wildlife Fund, use the verein model.
Political parties
Political parties and alliances, such as trade unions, use the verein model.
What are the (a) advantages and (b) challenges and risks of issuing RSU’s in connection with the Up-C IPO?
Advantages of RSUs in an Up-C IPO
- Incentivizes Long-Term Commitment: The vesting schedule encourages partners to remain with the company post-IPO.
- Simplifies Equity Compensation: RSUs are straightforward to administer compared to other forms of equity compensation, such as options or partnership interests.
- Aligns Interests with Public Shareholders: RSUs tie the partners’ compensation to the performance of the public company’s stock.
Challenges and Risks
- Tax Complexity: The tax treatment of RSUs in an Up-C structure can be complex, especially when combined with the partners’ existing partnership interests and exchange rights.
- Dilution: Issuing RSUs dilutes the ownership of existing shareholders, which may be a concern for public investors.
- Market Risk: The value of the RSUs depends on the performance of the C corporation’s stock, which is subject to market fluctuations.
What are the key considerations for partners receiving RSU’s in connection with the Up-C IPO deal?
Key Considerations for Partners Receiving RSUs
Vesting and Liquidity: Partners receiving RSUs must wait until the units vest before they can receive shares of the C corporation’s stock. Once vested, they can sell the shares (subject to any lock-up agreements or insider trading restrictions).
Dilution: Issuing RSUs to partners may dilute the ownership of existing shareholders, including public investors, so the number of RSUs granted is typically carefully calibrated.
Alignment with Public Shareholders: Since the RSUs are tied to the C corporation’s stock, partners receiving RSUs have a direct interest in the performance of the public company, aligning their incentives with those of public shareholders.
What are tax treatments of RSUs in an Up-C IPO?
Tax Treatment of RSUs in an Up-C IPO
Taxation at Vesting: RSUs are generally taxed as ordinary income when they vest, based on the fair market value of the C corporation’s stock at the time of vesting. The recipient must pay taxes on this income, and the company typically withholds taxes at vesting.
Partnership Interests and Exchange Rights: In an Up-C structure, partners often retain their partnership units in the operating entity (the LLC) and have the right to exchange these units for shares of the C corporation’s stock (or cash) at a later date. This exchange is typically a taxable event, but the RSUs themselves are separate from this exchange right.
Double Taxation Avoidance: The Up-C structure is designed to allow the operating partnership to continue to benefit from pass-through taxation for pre-IPO income, while the C corporation is subject to corporate-level taxation post-IPO.
Structure of RSUs in an Up-C IPO
Structure of RSUs in an Up-C IPO
Issuance by the C Corporation: The RSUs are typically issued by the newly formed C corporation (the Up-C) that goes public. These RSUs represent the right to receive shares of the C corporation’s stock upon vesting.
Vesting Schedule: RSUs usually have a vesting schedule (e.g., 3-5 years), which may include time-based or performance-based conditions.
Settlement: Upon vesting, the RSUs are settled by delivering shares of the C corporation’s stock (or cash equivalent) to the partner.
Purpose of RSUs in an Up-C IPO
Purpose of RSUs in an Up-C IPO
Alignment of Interests: RSUs are used to incentivize partners (e.g., founders, management, or key employees) to remain with the company post-IPO and to align their interests with those of the public shareholders.
Retention Tool: RSUs often have vesting schedules, which encourage partners to stay with the company and contribute to its long-term success.
Equity Participation: RSUs provide partners with a stake in the economic upside of the public company without requiring them to immediately convert their partnership interests into shares of the C corporation.
Allocations of purchase price.
In an acquisition deal, the purchase price can be allocated pursuant to IRC Section 1060 or in another agreed-upon way.
IRC Section 1060 requires buyers and sellers to allocate the purchase price among the assets acquired in an asset sale using the “residual method.” This method involves allocating the purchase price to specific asset classes in a prescribed order: cash, actively traded personal property, accounts receivable, etc. with the last category being goodwill.
Within each class, allocation of the purchase price to assets is based on their fair market values.
The amount allocated to an asset cannot exceed its fair market value on the purchase date.
Any remaining purchase price after allocating to goodwill.
Practical Considerations
Tax Implications: The allocation can significantly impact tax consequences for both buyer and seller. For example, buyers prefer higher allocations to depreciable assets like fixed assets, which can be depreciated over a short time: 5 or 7 years.
Amortization: Section 197 intangibles, including goodwill, are amortized straight-line over 15 years for tax purposes in asset acquisitions.
Reporting Requirements: Both the seller and the purchaser must file Form 8594, “Asset Allocation Statement,” with their respective tax returns to report the allocation.
Negotiation: The allocation is often a point of negotiation between buyer and seller due to its tax implications. However, both parties must use the same allocation method.
Fair Market Value: Determining the fair market value of assets, especially intangibles, may require professional valuation services
Claims Made vs. Occurrence insurance policies.
“Claims made” insurance is a type of policy that provides coverage for claims filed against the insured during the active policy period, regardless of when the incident that led to the claim occurred
This type of insurance is commonly used for business-related risks, such as errors and omissions (E&O) in financial statements, employment practices liability, and directors and officers (D&O) coverage
Key features of claims-made policies:
Coverage is triggered when a claim is made and reported during the policy period.
They often have a retroactive date, before which incidents are not covered.
Premiums typically increase each year to reflect the increased risk of retroactive claims.
The aggregate limit does not reset annually and is generally lower over the policy’s lifetime.
An occurrence policy provides coverage for incidents that occur during the policy period, regardless of when the claim is filed
Do a lot of public companies provide tax services?
Not many public companies provide tax services. H&R Block and CBIZ are among the few that do.
CBIZ and Marcum — what happened?
In 2024, CBIZ agreed to acquire Marcum in a $2.3 billion deal that would turn the accounting firm’s tax and consulting practices public.
Arthur Andersen — when was it convicted?
Was the conviction upheld?
Arthur Andersen was convicted in 2002 for obstructing the U.S. government’s investigation into Enron. After that the storied accounting firm stopped auditing public companies. Its demise turned the Big Five into the Big Four.
In 2005, the Supreme Court unanimously overturned the firm’s criminal conviction.
Size and scope of Andersen — total and U.S.
As of 2024: Andersen Global employs more than 17,000 people in more than 170 countries, according to its website. Its U.S. unit has more than 2,000 people across 25 cities.
Who are the “Big 6” Professional Services groups?
Accenture, Deloitte, E&Y, KPMG, McKinsey and PwC
Andersen Consulting could make this the “Magnificent Seven”
Credit Facility and Debts for “Project Everest” - EY’s failed spin-off of its consulting arm.
And What was the hope for the split of consulting from audit?
$700 million credit facility, with $270 million outstanding at the end of EY’s financial year in June.
About $600 million had been spent planning Project Everest before it was canceled.
The project was supposed to increase growth in consulting and audit by freeing them from conflict of interest rules that prevent cross selling of advisory services to audit clients.
CBIZ market cap has gone from __ to __ in last 10 years.
$420 million to $4.2 billion
What trades at a higher value: a public company or a private company?
Mark: Generally, a public company, because most private deals lack scale or leadership to pursue an alternative.
General: Public company, because of (1) liquidity premium, (2) access to capital, (3) transparency and regulation, and (4) broader investor base.
But: While public companies often trade at higher valuations due to these factors, private companies may command a “control premium” because ownership often includes operational control. Additionally, private equity investments may offer higher returns over time due to the illiquidity premium and early-stage growth opportunities.
Alex Reyes
HR. Out on maternity leave for a while. Heads up philanthropy efforts for Andersen.
Sanna
Local HR for LA
Alexa Vieira LaBianca
Head of HR for all of Andersen. Sits in LA. You had first day lunch with her and Dan Lopez.
Andersen Difference Relative to Market regarding a possible IPO
- Consistent YoY growth in revenue and net income.
- Predictable revenue model (low volatility)
- Inorganic growth (merger pipeline)
- Service line expansion
- Brand
Of all companies currently listed on S&P 500, only __ reported consistent positive YoY growth since IPO and only __ reported revenue growth at 18% or more.
42 and 15.
Market YoY net income growth S&P 500
Median is 10.77%
Of all companies listed on the S&P 500, how many have had consistently positive YoY growth in net income?
and how many have had consistently positive YoY growth in EBITDA?
None.
Only 6.
Historical Net Revenue for Andersen
Positive growth every year since inception in 2002. 18% Compound Annual Growth Rate (CAGR) during that time.
Net income growth for Andersen.
Positive every year, a Compound Annual Growth Rate (CAGR) of 24% since 2009.
Andersen is presently in _____ countries.
179.
Andersen service lines post-expansion - 10 of them.
(Tell Las Vegas Friends: Great Power In Confidence, Great Life)
Tax
Legal
Valuation
Financial Due Diligence
Global Mobility
Private Wealth Services
Investment Banking
Consulting
Global Private Banking
Litigation Support
Cultural Legacy of Andersen
Professionalism
Client Service
Stewardship
Tangible Outcomes of Strong Cultural Legacy
Clients, Talent, Margins
Number of Andersen layoffs since 2002.
None, including during the Great Recession (2007-2009) and the Pendemic (2020-2022)
CAGR means
Compound Annual Growth Rate
Intrinsic vs. Relative Valuation Methods
Intrinsic: Determined by cash flows and risk. Key questions: appropriate discount rate, time horizon and other variables. Used in M&A deals.
Relative: How similar companies are priced by the market. Key question: What does “similar” mean? Used in equity markets.
Except in limited cases, analysis price targets using a ____________, not ____________.
Trailing PE ratio
Expected Earnings Per Share
The only way a pice of news can alter investors’ demand is by changing the expected earnings growth over
The next two years. Analysis tend to ignore information about a company’s earnings three years from now.
Los Angeles Practice Management Team
Sanna Wright, HR
Yeonhee Shim, Finance
Astred Gutierrez and Douglas Hernandez, Operations
Joy Dennis, Talent Acquisition
Danny Castillo and Andrew Marroquin, IT
OMD, PCS Service Line Lead and Commercial Service Line Lead for Los Angeles
Dan Lopez.
Private Accounting Solutions (PAS) lead for Los Angeles
Jacqueline Riojas
Real Estate Valuation Services Lead for Los Angeles
Daniel Provencio
Leads in LA for:
Transfer Pricing
SALT
Business Valuation
Kevin Kiyan
Pravin Van Enger
R. J. Starr
U.S. Country Managing Director
Dan DePaoli, Greenwich
Regional Managing Directors
Frank Cassidy, Western Region (LA, SF, etc.)
Dorice Pepin, Central Region (CH, Dallas, Houston)
Peter Coscia, Northeast Region (NY, Boston, DC, etc.)
FAS
PCS
PAS
ICS
FAS — Forensic Accounting Services
PCS — Private Client Services
PAS — Private Accounting Solutions
ICS — Investment Consulting Services
PTET election
Pass-Through Entity Tax election
Who is your HR person?
Deirdre, because you are on a national team.
Three drives on PC
H Drive: Personal space on the server. Templates, for example. Data redundancy. I Drive: IT drive; houses all software installs. J Drive: LA drive; houses all LA client information, files; etc.
Tax Seasons.
Tax Seasons: Spring tax season starts end of Feb until 4/15. Fall starts end of July through Oct. 15. Fall is much busier than spring. For Private Accounting Solutions: beginning of January until March 31.
Number of total locations, us locations, us professionals, global professionals.
475 locations.’25 US locations.
2000 US professionals
17,000 global professionals.
When was the Andersen partner vote held to go forward with the IPO?
November, 2024.
Who will be the audit firm for the public company?
Why couldn’t we hire one of the Big 4?
BDO will be the audit firm. (We were using EisnerAmper, out of NY, previously)
We couldn’t hire Big 4, because we have retired partners who get pensions, which are unfunded liabilities, which creates conflicts issues.
Who will be performing financial diligence for Andersen re: the IPO?
What “gap” will it be covering?
The Connor Group. This governs the “gap” between the accountants and the I-bankers.
Who will be the i-bankers on the IPO deal?
Morgan Stanley. There have also been discussions with DB and UBS for being “second chair” in the deal.
What will Morgan Stanley do as the i-bank in the IPO?
(Very Underwhelming People Really Should Make Better Sense Probably)
- Valuation and pricing: They determine the company’s value and set an appropriate initial share price range13.
- Underwriting: The bank purchases a substantial portion of the shares at a discount to sell in the open market, sharing the financial risk5.
- Prospectus preparation: They create a detailed prospectus disclosing all relevant information about the issuing company2.
- Regulatory compliance: The bank ensures adherence to SEC regulations and handles necessary legal issues3.
- Syndicate formation: They often form and manage a syndicate of banks to share the underwriting risk for larger IPOs4.
- Marketing and roadshows: Investment banks organize presentations and meetings to generate investor interest25.
- Book building: They gauge investor demand and adjust the final share price accordingly7.
- Share allocation: They manage the distribution of shares to investors7.
- Post-IPO support: Some banks continue to provide market-making and analyst coverage after the IPO1.
Directors for public Andersen
Two have been found so far:
-John Joyce. He has accounting and consulting expertise. He will chair the Audit committee.
-Bob Gunderson. Legal expertise.
What committees are required by the NYSE for the public company?
- Audit Committee: Must have at least three independent members who meet enhanced independence standards. All members must be financially literate, and at least one must have accounting or related financial management expertise13.
- Compensation Committee: Must consist entirely of independent directors. Responsibilities include reviewing CEO compensation, evaluating CEO performance, and recommending non-CEO compensation and incentive plans2.
- Nominating/Corporate Governance Committee: Must be composed entirely of independent directors. This committee is responsible for identifying qualified board member nominees, recommending director nominees, developing corporate governance principles, and overseeing board and management evaluations12.
What percentage of the board must be independent in an NYSE company?
A majority must be independent.
Besides the required three committees, what other committees will be formed for the public Andersen?
Expansion Committee (deals with acquisitions) and Investment Committee. Probably other committees as well.
When will Andersen consulting be merged into Andersen?
Currently scheduled as second quarter of 2026.
Describe the “quiet period” after an S-1 filing.
The “quiet period” for a company that has filed an S-1 registration statement is a crucial phase in the Initial Public Offering (IPO) process. This period extends from the time a company files its registration statement with the SEC until 40 days after the stock starts trading publicly5.
Key aspects of the quiet period include:
Duration: It begins when the S-1 is filed and continues until 40 days after the stock starts trading5.
Purpose: To preserve objectivity and prevent the company from providing insider information to select investors5.
Restrictions: The company, its management, and related parties must limit what information they release to the public12.
Communication limitations: Companies must ensure that any “offer” of registered securities complies with federal securities laws7.
Allowed communications: Companies can release factual business information and provide limited public information about their plans to engage in a registered securities offering7.
Violations: Failure to comply with these restrictions is referred to as “gun-jumping”12.
The quiet period rules aim to ensure that all relevant information about the company is contained in the S-1 filing, creating a level playing field for all potential investors4.
What goes into an S-1 filing?
An S-1 filing contains comprehensive information about a company seeking to go public. The key components of an S-1 filing include:
Prospectus: This is the main part of the S-1 and contains:
1. Summary information about the company’s business operations
2. Financial statements, including income statements, balance sheets, and cash flow statements
3. Risk factors associated with investing in the company
4. Use of proceeds from the IPO
5. Determination of the offering price
6. Dilution information
7. Management’s discussion and analysis (MD&A) of financial condition and results
8. Description of the company’s business model and how it compares to peers
Information about the company’s board of directors and management team
9. Details about the underwriters involved in the IPO process
10. Supplemental Information: This section includes:
A. Expenses incurred for the offering
B. Recent sales of unregistered securities
C. Additional financial information not required in the prospectus
D. Exhibits and financial statement schedules
The S-1 filing must provide a complete and accurate picture of the company’s business and financials123. All information must be true and complete at the time of filing to avoid potential penalties4. The SEC requires this detailed disclosure to help potential investors make informed decisions about participating in the IPO36.
How many companies will eventually be acquired?
Up to 80.
Who are the overall leads for the acquisitions?
James Frost, Cathy and Jen Locke.
Who on the team previously worked at BDO?
Paul Ernst
What’s the situation in the U.S. for ownership of law firms by non-lawyers?
Have some jurisdictions relaxed restrictions? If so, which ones?
How about foreign jurisdictions?
In the United States, the American Bar Association’s (ABA) Model Rule of Professional Conduct 5.4 generally prohibits non-lawyer ownership of law firms15.
However, some jurisdictions have begun to relax these restrictions:
-The District of Columbia has allowed limited non-lawyer ownership since 19911.
-Arizona eliminated Rule 5.4 in 2020, allowing non-lawyer ownership through Alternative Business Structures (ABS)15.
-Utah has implemented a “sandbox” model to explore non-lawyer ownership5.
Internationally,
-The United Kingdom has allowed non-lawyer ownership of law firms since 2011, with some firms reporting significant growth as a result6.
-The European Court of Justice is currently considering the legality of German rules restricting third-party ownership of law firms, which could have implications for EU legal professions3.
Jeff Malo
MD in US National Tax Office.
Located in NY office.
JD/LLM
SAP
SAP is an acronym for Systems, Applications, and Products in Data Processing. It is a company that produces software for managing business processes. SAP’s software helps businesses streamline operations, improve efficiency, and increase productivity.
What PE firm announced on January 7 of a “strategic alliance” with which UK financial services advisory firm, which included an investment in the financial services advisory firm?
Lovell Minnick Partners (PE) firm and Broadstone.
Stated purpose of Anderson Global as a Swiss Verein
- A common brand among its member firms.
- A common and coordinated strategy among its member firms.
- A common and coordinated approach to risk management.
- Common technology and administrative platforms and systems.
- Common governance bodies (set forth in the Articles)
- Quality assurance and provision of quality services to all Member Firm clients.
- Stewardship of the respective Member firms for the mutual benefit of all the Member Firms, keeping future owners and employees in mind.
Who are the Anderson Global directors of the Verein as of October, 2024, from the Andersen Tax Member Firm?
- Mark Vorsatz
- Joseph Toce
- Gerald DesRoches
- Joe Karczewski
- Ellen MacNail
- Dorice Pepin
Who is the chairman and CEO of the Verein?
Mark Vorstaz
Who is former Dentons founding Global Chairman who Mark knows and has conversed with, who might be very helpful with finding good local counsel for foreign acquisitions?
Joe Andrew
What were the asset categories bought and sold in the Antion APA vs. the Gould APA?
Antion: AR, WIP, Clients, Books & Records, and Goodwill
Gould: Equipment, IP and “Prepaid Items” [Gould to revert on what this included]
What the situation with the PCAOB under the new Trump administration?
Trump’s nominee for SEC Chairman, Paul Atkins, has previously supported the idea of the Public Company Accounting Oversight Board (PCAOB) being rolled up into the Security and Exchange Commission.
Atkins previously worked at PwC.
What is an ERP?
ERP stands for “Enterprise Resource Planning,” which refers to a software system used by businesses to manage and integrate key operational processes across different departments like finance, human resources, supply chain, sales, and procurement, providing a unified view of data and streamlining activities within the organization; essentially acting as a central hub for all business information, eliminating data silos and improving efficiency with a single source of truth
November vote of partners on IPO.
269/272 in favor.
Mark is on __ Boards and will be _______ them in connection with the IPO.
11
Leaving
754 election
Critical for the up-c structure. Allows step up in basis of the assets, goodwill amortization, and a “tax shield” so that amortizing certain items (like goodwill) can shield income from taxation.
What market cap will we go out at in the IPO and how much restricted stock will go to non-partners?
About $3-5B market cap.
150MM in restricted stock will go to non-partners. Great retention tool.
Target date for IPO.
September 10, 2025
What will be the multiple on acquisition deals?
Probably 12x earnings, with earn outs in cash.
What’s the cash vs. stock deal for acquisition targets?
50/50 cash/stock.
How do we compare with S&P500 growth rate?
SP500 growth rate is about 7.23% for revenue. Andersen has been at 18% for revenue.
Target firms will work with ____ to transfer firm’s financials to GAAP.
Why the switch?
BDO.
The switch is not to do the IPO, but rather to give us comparable information across member firms.
Who recently purchased an interest in CohnReznick?
Apax Partners
What is Apriol Legal
A company from a merger between Atlanta based Aprio and Radix Law, which will operate a non lawyer-owned firm in Arizona. Each has obtained licenses to operate as an “alternate business structure” in Arizona.
As of 2/25/25, we have a presence in ____ countries, with _____locations, _______ partners and ______ professionals.
179 countries
657 locations
2,505 partners
19,784 professionals
What are the financial statements being requested from each Member Firm in connection with acquisition due diligence?
Income statement
Balance sheet
Statement of cash flows
What Big 4 firm was blocked by the Saudi Wealth Fund from Advisory Work for 1 year?
PWC
How many partners at Andersen are women?
34% with plans to raise this to 40% in the next three years. (Retired male partners will be replaced by women.) More than half of our total workforce is women.
What is a Cash-Free Debt Free transaction?
A “Cash-Free Debt-Free” (CFDF) transaction is a common structure in mergers and acquisitions (M&A), where the buyer purchases a company without assuming its existing debt or retaining its cash. Here are the key aspects of CFDF transactions:
In a CFDF transaction, the seller retains all excess cash on the balance sheet and is responsible for paying off any outstanding debt before the sale is completed.
The buyer pays for the enterprise value (EV), which represents the core operating value of the business, excluding cash and debt.
What are the four major service lines and what do they do?
Private Client Services (PCS). Comprehensive tax and financial services for individuals and families, including issues regarding multigenerational wealth and closely held businesses.
Business Tax Services (BTS). Tax planning, compliance and reporting.
Alternative Investment Funds (AIF). Tax and financial services for a wide range of investment funds for family offices, hedge funds, PE funds and others.
Valuation Services (VS). Independent valuations and related navigation of tax laws and regulations.
***MOST REVENUE IS IN PCS AND BTS
Half of all revenue comes from what 2 regions?
NY Metro Area and No. Cal. Region.
Approximately how many employees does Andersen Tax have?
2,150 approximately.
For the year ended 12/31/24, the largest single client accounted for __ of total AR, and the 20 largest clients accounted for ___ of total AR.
1%
11%
At 12/31/24, the average payment time for outstanding sales was _____.
51 days.
What is the breakdown of revenue by group?
PCS — 50%
Business Tax — 36%
Alternative Investment Fund Services — 9%
Valuation — 5%
