BVA Team Members Ascend to New Heights
This January, BVA congratulates ten team members on hard-earned promotions. BVA prides itself on the pursuit of excellence and invites you to join in recognizing the following pace setters for their growth and accomplishments.>
Jason Billeck Joins BVA
In August, BVA welcomed Jason Billeck as General Counsel and Managing Director. He provides legal guidance and advice to BVA, while also providing financial and valuation services to BVA’s clients. Jason previously practiced as a complex commercial litigation partner at Winston & Strawn LLP and Weil, Gotshal & Manges LLP.
When announcing his move, Jason wrote to friends and colleagues: “I had the pleasure of working with BVA while at Weil Gotshal and Winston & Strawn. I always was highly impressed with the quality work product and client service that BVA consistently delivered. As a result, I am thrilled to be part of the BVA team.”
EUROPEAN PARLIAMENT COMMISSIONS
BVA STUDY ON DODD-FRANK REFORM
In December, the European Parliament’s ECON Committee published “Financial Supervision and Regulation in the US: Dodd-Frank Reform,” a study authored by Joseph Mason (LSU Professor and BVA Affiliate), Scott Dalrymple, and Jeff Balcombe. The study summarizes key provisions of the Dodd-Frank Act, from its enactment in July 2010 through recent developments, including attempts to define and implement rules to satisfy the Dodd-Frank Act’s provisions and efforts to roll back certain provisions.
Jeff Balcombe Provides
Predictions + Analyses
During 2018, the Federal Reserve announced four increases of the target federal funds rate that moved the target rate range up by an entire percentage point after the target federal funds had remained fairly low since the recession. In his latest article published by International Risk Management Institute (IRMI), Jeff Balcombe considers the impact of the rising interest rate environment on both the earnings and valuation of life insurance companies, as well as an outlook for interest rates into 2019.
Speaks Across the Region
Laurie-Leigh White continues to lead thought-provoking discussion through a variety of speaking engagements. For example, she recently joined Ladd Hirsch (Winstead) and Grant Dorfman (Sheehy Ware & Pappas, and formerly Harris County judge) in recording and producing a webinar. The trio considered legal, forensic, and valuation issues related to business divorce. The discussion was broadcast live at the Texas Bar in Austin and will be available to stream for CLE credit at times specified by the Texas Bar.
Upcoming: Cryptocurrency and Fintech Insights
With the recent proliferation of technology-enabled financial services and products, professionals face the continuous challenge of remaining up to date on the latest developments in their fields. As part of a series of white papers that will be released this year, BVA experts will examine the characteristics, benefits, risks, and regulatory framework surrounding cryptocurrencies as well as developments in marketplace lending due to the rise of financial technology, or fintech.
SEC v. Reed J. Killion, Jeffrey W. Tomz, and Uni-Pixel, Inc.
The SEC alleged that Uni-Pixel’s former CFO, a CPA, had failed to adequately disclose significant agreements in financial statements as required under GAAP milestone accounting, and that he did so knowingly and with severe recklessness, or at least negligently. During the period of the alleged inadequate disclosures, Uni-Pixel’s stock price rose, and the CFO exercised stock options and sold shares at a profit. The stock price subsequently collapsed. The SEC sought penalties and disgorgement of stock sale proceeds exceeding $1 million from the CFO.
BVA first worked with counsel to define the legal standard for the CFO’s conduct, and related that guidance to the AICPA Code of Professional Conduct to establish a standard for due care. BVA then analyzed the CFO’s conduct in the context of that standard, as well as relevant reporting requirements, facts and circumstances, and guidance regarding the roles of the CFO, the independent auditors, and the audit committee, and opined that the CFO had exercised the degree of care that a reasonably prudent accountant would have exercised in the same circumstances. BVA issued an expert report and testified at deposition.
Following the SEC’s deposition of BVA’s expert, the SEC settled with the CFO for a civil penalty of $50,000.
Advice Interactive Group, LLC v. Web.com Group, Inc.
Advice Interactive Group, LLC (“AIG”), a provider of Search Engine Optimization services, brought suit against a former customer, Web.com Group, alleging, among other things, that Web.com terminated their service agreement and, in doing so, breached the service agreement, infringed on certain copyrights, misappropriated trade secrets under federal and Florida law, and violated Florida’s Deceptive and Unfair Practices Act. Web.com alleged in its counterclaim that AIG breached the service agreement by misrepresenting its ability to perform the services described therein and the scale of its product offering.
BVA provided expert analysis supporting Web.com’s affirmative defenses and counterclaim, including opining on AIG’s financial position over time and on economic damages. BVA also rebutted AIG's damages claims, including lost profits, unjust enrichment, and reasonable royalty analyses relating to alleged trade secret misappropriation and copyright infringement.
The matter settled following expert depositions.
Highpoint Risk Services LLC, et al. v. Companion Property and Casualty Insurance Company
Highpoint claimed Companion owed it more than $38 million for unreimbursed claims payments. The claims stemmed from Companion’s fronting arrangement with Highpoint whereby Highpoint was to collect premiums for “pay-as-you-go” workers’ compensation insurance policies from insured parties and remit amounts collected to the appropriate parties, including a reinsurer. Highpoint claimed that Companion, having later assumed the collateral and ongoing liabilities of the reinsurer, did not properly reimburse Highpoint for its prior claims payments on these policies, and submitted an expert report to support its claims.
BVA analyzed voluminous accounting, bank, and other records to determine amounts due and owing pursuant to the fronting arrangement. BVA quantified net cash inflows and outflows associated with the “pay-as-you-go” workers’ compensation policies, taking into account all aspects of the insurance fronting arrangement. BVA uncovered critical flaws in Highpoint’s analysis of claimed damages, and issued an expert report and testified at deposition on these topics.
Following expert depositions, the parties settled the dispute.
Buy-Side Due Diligence for Confidential Investment Group
A private equity fund, in conjunction with co-investor partners, was considering a minority-stake investment in an asset manager with over $1 billion in assets under management. The target asset management firm specializes in rural land, agriculture, water, and renewable energy. The investor group entered into negotiations with the target to acquire a stake in the general partner (i.e., management company).
BVA performed buy-side due diligence related to a potential investment in the general partner of the asset management firm. BVA conducted quality of earnings assessments and other financial due diligence of several of the target’s investments, including entities involved in farming, water trading, solar power, and other activities. BVA also provided commentary regarding the investors’ valuation models, including assessments of distribution waterfalls.
Over the course of the engagement, BVA identified a number of considerations for greater scrutiny by the potential buyers, including potential valuation adjustments. Leveraging findings from BVA’s financial due diligence and valuation consulting work, the investment group finalized negotiations with the target, successfully completing the intended transaction.
TZP Group is a private equity firm managing multiple investment funds holding a broad range of portfolio companies with U.S. operations in the consumer and business services space. Like many sponsors, TZP is required to report estimates of fair value to investors (limited partners) for each of its funds on a quarterly basis. On an annual basis, these fair value marks are subject to review by the funds’ independent auditors. TZP found the process of developing and subsequently defending the estimates of value to the auditors to be time-consuming for its deal teams, and retained BVA to assist.
BVA analyzes and reports fair values to TZP’s limited partners annually, and assists in the explanation of those fair values to auditors. BVA coordinates with both TZP personnel and audit review teams to ensure a smooth review process.
TZP’s limited partners receive the needed reporting while TZP’s deal teams are free to focus on deal and operations-related activities.
Alta Mesa Resources
Alta Mesa Resources (NASDAQ: AMR), an independent, publicly traded exploration and production company focused on the development and acquisition of unconventional oil and natural gas reserves in the Anadarko basin, wished to enter into certain intercompany transactions for which it desired fairness opinions.
The board of Alta Mesa Holdings GP (the general partner of Alta Mesa Resources) retained BVA to analyze aspects of the intercompany transactions in question, including financial terms, rates, and the value of certain contributed assets. BVA provided the board with multiple fairness opinions which addressed the fairness of the various terms, rates, and values to the company from a financial point of view. BVA also provided the board with presentations detailing the various methodologies and analyses considered by BVA in developing its opinions.
Armed with BVA’s work, the company met loan covenant requirements and successfully proceeded with the proposed transactions.
On September 11th, 2018, BVA joined forces with more than 1,100 volunteers supporting 20 nonprofits across 28 project sites for The Communities Foundation of Texas’ 18th annual Freedom Day. Freedom Day is a community service event honoring the lives lost and forever changed by the tragic events of September 11th, 2001. BVA was chosen to join Carry the Load’s team, allowing the team to serve together while honoring veterans and their families. BVA had the opportunity to hear from a WWII veteran and to clean headstones at the DFW National Cemetery. It was a time of reflection and BVA is glad to have been a small part of this massive effort involving many others across our community.
BVA’s team members have a longstanding passion for the Dress for Success mission. Dress for Success is an international not-for-profit organization that empowers women to achieve economic independence by providing a network of support, professional attire, and development tools to help women thrive at work and in life. BVA worked behind the scenes to tag, sort, and count donated and purchased clothing and accessories. It was important and empowering to volunteer for a cause that helps transform the lives of women. Team members found it encouraging that through hard work, many women in need of a second chance would be so grateful for the new opportunities.
For the past several years, BVA has volunteered through the Rainbow Days organization, a nonprofit serving nearly 180,000 children in the Dallas community. Rainbow days helps children and youth facing adversity to build coping skills and resilience that create positive futures. Through their Back to School Celebration, BVA team members have cultivated relationships and become connected to Rainbow Days’ mission by seeing the positive impact this nonprofit and its volunteers have on the kids it serves. To help support Rainbow Days’ mission, several BVA team members have joined Rainbow Days’ Pot of Gold Luncheon Committee to plan the annual event which helps to fund their efforts.