Venture Capital

DiFilippo Corporate Finance Group offers independent and objective valuation opinions for financial and tax reporting purposes to venture capital, both at the V/C fund and portfolio company level.  Clients select DiFilippo Corporate Finance Group professionals due to their experience working with VC related companies including:

  • Completing hundreds of valuations for stock compensation, asset acquisitions, debt/equity classification and impairment related issues specializing in technology, life science and alternative energy.
  • Work with companies from early stage seed investments in new formations through initial public offerings.
  • The combination of working with both early stage and late stage portfolio companies and our experience with public companies enables us to provide venture capital portfolio companies the relevant experience needed at each stage of the Company’s lifecycle. Project and institutional knowledge learned in each valuation is retained, applied and considered as Companies grow and require additional fair value services.
  • Our extensive experience in dealing with venture capital investments allows us to provide consulting and opinion level services to venture capital funds regarding their equity or debt investments. The adoption of fair value FASB ASC 820 Fair Value Measurements and Disclosures (formerly SFAS 157) requires that venture capital funds mark to market their investments either quarterly or annually depending on reporting requirements.

Financial Reporting - Venture Capital Portfolio Companies
DiFilippo Corporate Finance Group fair value opinions and consulting services for financial reporting include the following:

  • Share Based Payments
    • Stock compensation and restricted stock
    • Market condition based equity grants
  • Debt/Equity Classification, Fixed Income, Derivatives & Other Complex Instruments
    • Preferred stock, debt and equity investments classification
    • Bifurcation of value of certain preferred stock and venture debt investments into debt, mezzanine, and equity components as required by accounting standards
    • Allocation of fair value to warrants.
    • Calculating effective interest rate of debt
    • Accretion of debt and/or preferred stock to fair value
    • Fair value of debt
    • Credit risk/non-performance adjustments for swaps, forwards and other counterparty transactions
    • Embedded derivatives
  • Business Combinations and Asset Acquisitions
    • Valuation of individual assets for purchase price allocation
    • Valuation of contingent consideration
    • Review of purchase & sale agreement, sale terms and pricing
    • Pre-deal enterprise valuation modeling.
  • Impairment
    • Annual studies for goodwill and indefinite lived intangibles
    • Long lived assets
    • Equity investments in privately held companies.
  • Fair Value Measurements
  • Fresh Start Accounting
  • Other Advisory Services
    • Drafting of fair value disclosures for financial statements
    • Responding to SEC comment letters
    • Consultations with regulators

Tax Reporting - Venture Capital Portfolio Companies
DiFilippo Corporate Finance Group’s tax reporting valuations include IRC 409A common stock valuations, tax structuring to general corporate planning. Our services have been challenged and successfully defended by the Internal Revenue Service and international taxing authorities. Our tax reporting and consulting services for VC portfolio companies include:

  • General Tax Advisory
    • Stock compensation studies for § IRC 409A compliance
    • Estate & gift planning for executives and directors for equity grants
    • Tax accounting
    • Worthless stock deductions (IRC §165)
  • Transaction Related
    • Net operating loss limitations (NOL) and built in gains analysis (IRC §382)
    • C-Corp to LLC-Corp conversions (IRC §1374)
    • Valuations of partnerships & other pass-through entities
    • Legal entity valuations, entity spinouts and asset transfers
    • Pre-deal assessment/modeling of financial valuation impact in Merger/Acquisitions advisory
      • Tax amortization from stepped up basis of fixed assets, section §197 goodwill & intangible assets from asset deal structure or IRC 338h.10 election
      • Valuation impact of NOL 382 limitations, non-complete 280g tax, transfer pricing planning and deal structuring of intellectual property/other assets
      • Non-compete agreements IRC §280g