We’re growing! CohnReznick’s Value360 practice has continued to expand its services over the past year to help clients create value at every point in their business lifecycle. 

Highlights include:

• Added M&A Insurance Advisory Services, led by Brett Burgan, that represents many of the largest insurance carriers globally. The M&A Insurance Advisory team conducts financial due diligence for clients issuing representation and warranty insurance, informs best practices when negotiating terms in representation and warranty policies, and supports clients during the insurance claim and defense processes.
• Expanded our Operational Diligence and Performance Improvement capabilities with the addition of Jeff Wissink and others to provide clients with insights on the front-end of a transaction and post-closing, thereby enhancing value creation.
• Expanded our Sale and Purchase Agreement (SPA) Advisory practice with the addition of Laura Kobes and Andrew Still. Laura brings years of experience, deepening our expertise in protecting our clients going into a transaction.
• Expanded our Investigations and Integrity Monitoring capabilities with the addition of Joseph Spinelli. Joseph is based in our New York office and is a globally recognized thought leader and practitioner in the areas of integrity monitorships, white-collar investigations, the Foreign Corrupt Practices Act (FCPA), anti-bribery and corruption, and risk management.
• Grew our Transaction Advisory Services Tech Industry focus with the hiring of Greg Mochizuki in our San Francisco office. Greg is focused on upper middle market private equity firms and acquisitive companies, and advises clients on software and tech-sector transactions.
• Continued to add bench strength in our Infrastructure Advisory Services capabilities with the addition of Lester Kao, who joins Christopher Livingstone, our practice leader. Lester advises public and private entities on issues including infrastructure management, funding and finance, decarbonization strategy, target operating model (TOM)/governance deployment, and risk management and mitigation strategies.

Practice areas: Key stats from 2023 

Transaction Advisory Services:

• Advised on more than 675 deals valued at more than $18 billion

Restructuring and Dispute Resolution:

• Worked on 55+ matters providing restructuring, dispute resolution, forensic accounting, and performance improvement services to clients; top industries were commercial real estate, healthcare, hospitality, and manufacturing and distribution.

Project Finance and Consulting:

• Completed over 700+ client engagements in the areas of tax credits and other subsidies, infrastructure advisory, transaction support and compliance, and financial modeling.

Valuation Advisory Services:

• Worked on more than 1,600 audit matters to support CohnReznick’s assurance teams with fair value measures; experienced two consecutive years of back-to-back 25% growth in audit client needs.

M&A Insurance:

• Helped underwrite reps and warranties policies for 1200+ transactions in 2023; worked on 15 transactions valued at more than $1B.

Case studies

Litigation Trustee

Background: A large casino was required by the state gaming board to undergo a significant expansion and, prior to beginning the expansion, the casino completed a $475M debt refinancing and transferred $155M to certain former owners. The casino was unable to secure sufficient funding for the expansion and filed for Chapter 11. The Liquidating Trustee filed an adversary proceeding against the recipients of the $155M, alleging a fraudulent conveyance.

Our role:  Financial advisor to the litigation trustee

Results:

• Our expert report proved the following:
  • The casino failed the balance sheet test as of the transfer date; based on our valuation, the casino’s liabilities exceeded its fair market value.
  • The casino also failed the ability to pay any small capital tests as of the transfer date.
• Our analysis showed that the casino either knew, or should have known, that the construction would cost more and take longer than projected. Accurate company projections would have reflected future defaults and covenant violations.
• Case settled prior to going to trial.

Aerofarms, Inc.

Background: A sustainable indoor agriculture company and operator of the world’s largest vertical farm, along with fourteen affiliated entities, filed for Chapter 11 protection with approximately $100M of liabilities, including funded debt of $67.5M. The Court approved the sale of the Debtors’ assets.

Our role: Financial advisor

Results: AF NewCo, Inc. was formed and served as the stalking horse bidder (and ultimately the buyer) for substantially all of the assets of AeroFarms, leading to a successful outcome from the bankruptcy process for AF NewCo, Inc. to execute their growth strategy.

Energy Company in Need of Waterfall Analysis

Background: A renewable energy client asked for our assistance in analyzing a distribution waterfall associated with the sale of private equity’s partnership interest. 

Our role: Review the preliminary waterfall calculation provided by the members and identify any inconsistences; perform necessary recalculations.

Results: We identified a number of inconsistences between the members’ calculation and the governing docs, and performed recalculations. Our client was able to use CohnReznick’s recalculated distribution waterfall to support an additional $10M in distributions.

Infrastructure Team Part of $8B Redevelopment Effort in Washington D.C.

Background: The District of Columbia along with federal transportation partners at USDOT, Amtrak, the Federal Railroad Administration, and the Union Station Development Corp., have been conducting planning studies for the $8B redevelopment of Washington Union Station, the multimodal rail and transit hub for the D.C., Maryland, and Virginia region. The project partners sought a consultant to advise on next steps for governance, delivery, and funding/financing for the mega-project.

Our role: Develop a market-oriented business case including a funding strategy/plan and governance roadmap.

Results: The project partners are currently leveraging the CohnReznick business case to move ahead planning for the project, including letting engineering and design contracts in 2024. The project partners are also organizing a regional effort to fund the project with a mix of federal, regional, and private funding.

Sale of Privately Held Multi-Unit Women’s Health Clinic

Background: Client was evaluating strategic options.

Our role: CohnReznick provided sell-side financial due diligence advisory services, assistance with net working capital computation at close, support with sale agreement review and negotiations and closing balance sheet finalization. Areas of focus included:

• Quality of Revenue analysis of all service lines and revenue streams.
• Quality and sustainability of earnings (QofE)
• Identification and confirmation of operating trends
• Review of financial and operating environment and controls
• Identification of potential key-risks and areas of improvement
• Evaluating pro forma adjustments associated with payor reimbursement rate increases, service price increases, normalization of provider production, and ramp-up of newly opened locations.

Results: The CohnReznick team worked collaboratively with management and the investment banker to realize a successful transaction at a significantly higher valuation, than initially expected.

Private Equity Majority Stake Acquisition of Privately Owned Company

Background: A private equity firm required confirmatory buy-side financial due diligence as part of its acquisition process.

Our role: CohnReznick provided buy-side financial and tax due diligence services.  Areas of focus included:

• Quality and sustainability of earnings (QofE)
• Analysis of working capital trends and working capital target for close
• Tax due diligence
• Identification of key risk areas that may impact purchasing decisions
• Review and comment on sections of the draft purchase agreement

Results: We identified areas of risk and reductions to the target’s proposed EBITDA, resulting in a reduction to the purchase price. We also identified areas of tax exposure and recommended improvements to the target’s accounting policies, operating environment, and controls. The transaction successfully closed.

Appraisal of Mineral Rights in Howard County, TX

Background: The United States of America owns mineral rights underlying portions of the former Webb Air Force Base in Howard County, Texas, held through the General Services Administration. 

Our role: Quantify and appraise the market value of the mineral rights for the GSA to be used in the public auction process for federal property disposal.

Results: The appraisal was submitted on time, approved by the GSA review appraiser, and finally submitted by the GSA to Congress for approval, which is pending.

Estate Tax Valuation for the Estate of M. Sangal

Background: The Estate of M. Sangal required separate valuations for 28 IT consulting and staff augmentation companies after Mr. Sangal’s passing, to be completed in a month and a half (end of November 2023 deadline). 

Our role: Provide tax valuations to support the executor (Mr. Sangal’s partner/widow) in her administration of the Estate. 

Results: Preliminary valuations for all 28 companies were delivered in advance of the estate tax return filing deadline. As a result of the timely filings, the executor was able step into the management of the 28 companies.

Representation and Warranty Insurance Policy for an Acquisition of a Privately Owned Development and EPC Company 

Background: We were engaged by an insurance provider to consult on the underwriting for a representation and warranty insurance policy. Areas of focus included: review of the transaction documents including purchase agreement, disclosure schedules, and diligence reports; interview with buyer and buyer’s financial advisors on any findings; and identification of potential exposure from said findings.

Our role: Financial advisor

Results: We identified areas of risk and assessed potential exposure where the financial representations and warranties included in the purchase agreement may be breached. The insurance policy successfully closed. 

Claims of Loss Under a Representation and Warranty Insurance Policy

Background: A client needed analyses to support conclusions and opinions regarding financial damages claimed under a representation and warranty policy as a result of alleged errors and misstatements in the financial statements. 

Our role: Financial advisor

Results: Client leveraged our analysis to settle at a fraction of the initial financial damages claimed.