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Compensation toolkit: Impact of M&A activity on awards · PwC's accounting podcast

0:00
SPEAKER_00: Thought Leadership from PWC.
0:08
SPEAKER_02: Welcome to PWC's Accounting Podcast.
0:12
SPEAKER_02: I'm Heather Horn.
0:13
SPEAKER_02: Thanks for tuning in to another episode in our Toolkit series, where we take a deep dive each month into a single topic, recapping the basics, but also focusing in on frequently asked questions and judgmental areas.
0:28
SPEAKER_02: This month we're all about Stockholm.
0:31
SPEAKER_01: There's generally a blackout period and really being aligned with that period and when things have to be ready, ready to go in the system, up in live for the employees to see what they have is going to be really critical.
0:46
SPEAKER_03: There's a lot of different issues that can arise here, and some of them are pretty unique bits and pieces of accounting, of splitting up awards into different components and the like.
0:57
SPEAKER_03: That's just not what we normally think of as accountants to do, and so there's just a lot to be on the lookout for.
1:05
SPEAKER_02: So far this month, we've talked about a number of the building blocks of this.com model, and last week we hit some of the special issues for private companies.
1:14
SPEAKER_02: Today, to wrap up our series, Jay Saliver is joined by Gina Klein, a partner in our workforce transformation practice, to cover some of the additional challenges we see resulting from MA activity.
1:27
SPEAKER_02: Not surprisingly, managing.com awards is an important part of maintaining the deal value of MA transactions so there can be a careful balancing act between business goals and the accounting for share-based awards.
1:41
SPEAKER_02: There's a lot to cover, so let's get started.
1:49
SPEAKER_02: So, Jay and Gina, thank you so much for joining me for the last episode in our stock comp series.
1:54
SPEAKER_02: It's been a great month.
1:56
SPEAKER_02: And I know this is a topic that interests a lot of people, which is specifically some of the considerations related to shared waste awards when we're dealing with MA transactions or business combinations, because clearly a lot of unique issues.
2:09
SPEAKER_02: So I thought, Gina, before we got into the accounting, definitely might be helpful just to take a step back and understand some of the true business issues associated with this.
2:20
SPEAKER_01: Absolutely.
2:20
SPEAKER_01: And Heather, thank you so much for having me.
2:23
SPEAKER_01: It's really exciting to be here.
2:25
SPEAKER_01: Um, a big fan of these podcasts.
2:27
SPEAKER_01: Excellent.
2:28
SPEAKER_01: Yeah, I would say that you really a work, the workforce is really a very significant part of any transaction.
2:36
SPEAKER_01: And that may be either the retention aspect, keeping employees working and working through the transaction, or even trimming down the workforce in anticipation of integrating the team in the transaction.
2:51
SPEAKER_01: And I would say it's a lot of times nuanced by the transaction itself, and sometimes also by the specific facts of the companies themselves.
3:04
SPEAKER_01: So for example, if you're going to sell your business, you know, the employees might get anxious and you know want to leave the company.
3:14
SPEAKER_01: So there might be an element of trying to keep them working, to keep them active, so you can get the most value from the transaction.
3:21
SPEAKER_01: Or if you're selling a part of the business, you might have some of those same issues, but you also might have on top of that the issues of the employees having equity in the selling company.
3:32
SPEAKER_01: And the question becomes what do you do in those scenarios when the employees are no longer gonna be employees of the selling company?
3:42
SPEAKER_01: They ordinarily would be forfeiting their awards, and that might not be a good outcome in the transaction itself.
3:49
SPEAKER_01: So kind of thinking through what to do in that scenario.
3:52
SPEAKER_01: And then finally, if you're a buying company, there are a lot of you know considerations to think about.
3:59
SPEAKER_01: Firstly, understanding what the provisions in the existing programs are at the target and how you might change those provisions.
4:10
SPEAKER_01: And a part of that is whether the awards might accelerate or they might extinguish.
4:17
SPEAKER_01: So, really kind of thinking through all those aspects of in the terms of the deal, will the awards be cashed out and settled?
4:26
SPEAKER_01: Will they be replaced with awards based on the stock of the buyer?
4:31
SPEAKER_01: Will they be extinguished and then there's a new buyer program put into place?
4:37
SPEAKER_01: So, and then some considerations as well, like if the awards have performance conditions based on the metrics of the target business that may no longer be applicable.
4:48
SPEAKER_01: So thinking through what to do in those scenarios and ultimately how the company continues to retain employees through and beyond the transaction.
4:57
SPEAKER_01: These are all real issues that drive the value of the transaction by keeping the right workforce in place.
5:05
SPEAKER_01: Um and it's important to think really strategically about what you want to accomplish from a human capital perspective.
5:12
SPEAKER_02: So, Gina, before that's such a helpful background, and before we get into the accounting, just a question from your experience, do these issues tend to be sort of front and center when deals are being negotiated, or do they sometimes come as almost like an afterthought?
5:30
SPEAKER_02: And then it's almost like you have to scramble to make sure you achieve some of the objectives you were just talking about.
5:36
SPEAKER_01: Well, I see it all.
5:38
SPEAKER_01: I think best practice is to really get in front of it.
5:42
SPEAKER_01: So a lot of times I'm working with the diligence team and we're looking at, you know, the provisions upfront, understanding what the outstanding awards are, and then working through all of those, even doing like a mock purchase accounting calculation, which we'll go through in just a bit as we talk through the accounting.
6:00
SPEAKER_01: But really getting in front of it is best practice.
6:03
SPEAKER_02: Definitely uh makes sense because I can imagine if you're trying to sell your business and your workforce as a valuable asset, uh, you don't want to see them all walking out the door.
6:11
SPEAKER_02: So we'll get some more into that.
6:13
SPEAKER_02: But Jay, maybe with some of that background, why don't we start to jump into the accounting and perhaps starting with sort of I'll call base case, which is you're selling the business.
6:25
SPEAKER_03: Sure.
6:26
SPEAKER_03: And you know, when you're selling the business, certainly Gina mentioned that a big issue is trying to align your employees' interests with that potential sale of the business.
6:39
SPEAKER_03: And so we see a lot of different flavors around awards that might vest upon either a change of control of the whole company or a sale of a piece of the business.
6:52
SPEAKER_03: Sometimes those awards have been around for a while.
6:57
SPEAKER_03: Sometimes the company might issue new awards with that feature as they start thinking about a sale and want to make sure people are motivated to stick around through the sale.
7:07
SPEAKER_03: Sometimes we find, and I think Gina, you mentioned as well, that sometimes those awards might vest immediately upon the sale, but sometimes there's some type of post-merger retention period that people would have to meet before they vest in the award.
7:23
SPEAKER_03: And sometimes we find like other variations of it where maybe the award will vest only if there's both, a change in control, and then the person gets fired by the buyer or maybe doesn't get offered a comparable position by the buyer.
7:37
SPEAKER_03: So lots of flavors of these, and this pops up a lot.
7:41
SPEAKER_03: And sometimes we also see that the award might only vest upon a change in control.
7:47
SPEAKER_03: And that might particularly be the case if it's a special award that the company issues sort of once the deal is starting to take shape, and they want to make sure people stick around.
7:57
SPEAKER_03: But a lot of times there are also maybe awards that vest based upon, I'll call it normal service or performance conditions, but there's an automatic acceleration feature as well upon a change of control.
8:10
SPEAKER_03: So it's kind of an either-or type of situation.
8:12
SPEAKER_03: So lots of varieties here, and each one of these kind of have their own kind of accounting impacts.
8:18
SPEAKER_03: You know, we talked about, I think, in the first episode of this series, that if you know the base case of if you have a vesting condition that's tied into a change of control, that's a performance condition.
8:30
SPEAKER_03: And if you're talking about selling the whole company, then that performance condition isn't viewed as probable until the sale happens.
8:39
SPEAKER_03: So in that simple base case of an award that only vests upon a change of control, it may very well be the case that there's no accounting to do before closing, because it's not probable before that.
8:51
SPEAKER_03: Or if it's one where maybe it vests upon time-based vesting or performance condition, but it would accelerate upon a change of control, you may not have to do any different accounting along the way as you kind of work your way towards the deal because you're still focusing on that sort of time or performance-based vesting and not the change of control one.
9:11
SPEAKER_02: Hey, Jay, one question for you on that.
9:13
SPEAKER_02: And I feel like this comes up some other places too.
9:16
SPEAKER_02: So, you know, with a sale, you sign the contract or the agreement normally, and then sometimes there's approvals and other things that have to happen.
9:24
SPEAKER_02: But let's say it's like, oh, you like definitely think the sale's going to happen.
9:29
SPEAKER_02: Do you do accounting or do you really just wait until the actual sale closes?
9:35
SPEAKER_02: And that is what would trigger accounting in these cases that it was, let's say, vested upon the event of sale.
9:42
SPEAKER_03: Right.
9:43
SPEAKER_03: So we do find that the sort of the accepted practice for these sale of the whole company, the change of control of the whole company, is to wait until closing, that even as you move your way along and you get shareholder approval and maybe regulatory approval and other things, there's just too many external contingencies.
10:03
SPEAKER_03: I mean, there's always contingencies, but there's too many substantive contingencies that could happen that could blow up the deal.
10:10
SPEAKER_03: And so we don't view it to be probable as a matter of practice that everybody follows until it actually happens.
10:18
SPEAKER_03: Now, for this kind of situation, you might be talking, if you're talking about selling the whole company, you know, once the company is sold, it goes away and doesn't do any more financial statement reporting.
10:26
SPEAKER_03: So this is relevant as sort of you're in that phase of we're heading towards a sale, but maybe we're still a public company, we still have to report quarterly.
10:34
SPEAKER_03: So you get that, we get that question of, okay, in the first quarter after the deal happens, or the next quarter, uh sorry, it gets signed, but it hasn't happened yet.
10:41
SPEAKER_03: You know, do we have to start changing any accounting?
10:44
SPEAKER_03: And at least for this part of it, when you're talking about the whole company, uh, the answer is no, you don't.
10:49
SPEAKER_02: All right.
10:49
SPEAKER_02: Well, I think that's actually a in this case a good answer because definitely I think predicting probability could seem like it could get difficult.
10:58
SPEAKER_02: So I definitely think that's a good answer there.
11:00
SPEAKER_02: So then let me ask you another follow-up question, Jay, because obviously previously this month, we talked about modifications.
11:07
SPEAKER_02: And one of the scenarios, I can't remember, either you or Gina mentioned, I think Gina, was that the change to control condition could be added to the original award.
11:17
SPEAKER_02: So maybe you didn't have that, but then, oh, sale looks probable.
11:20
SPEAKER_02: Maybe you even signed a sale agreement.
11:23
SPEAKER_02: And so now you want to retain your employees.
11:25
SPEAKER_02: So you so you add that in.
11:27
SPEAKER_02: So then do we start to think about modification accounting at that point?
11:31
SPEAKER_03: Well, we would.
11:31
SPEAKER_03: We would think about it, and you'd run it through the model that we talked about in one of our earlier episodes.
11:38
SPEAKER_03: And so you'd be evaluating whether it was probable of vesting both before and after to figure out if you're in one of these type one, probable to probable changes or a different type of type of change.
11:52
SPEAKER_03: So we do see cases where let's say the award has probably already had some other vesting conditions, right?
12:00
SPEAKER_03: It had time-based vesting or a performance-based vesting, but the company wants to add in the feature to accelerate it upon a change of control to give people more comfort that they'll they'll get the award.
12:12
SPEAKER_03: Um and so when you add that in, that is viewed as a modification, you've changed the terms.
12:17
SPEAKER_03: It is a change in the vesting term, so you don't you don't kind of get out of having to evaluate modification accounting.
12:24
SPEAKER_03: But again, if you're in this situation where you're talking about selling the whole company, and it's a little bit of an inverted way to think about the how the logic connects together, so I'll do my best to be uh clear about it here.
12:37
SPEAKER_03: That at the time you make that change, it's not, as we said, it's not yet viewed as probable that the sale will happen.
12:46
SPEAKER_03: So therefore, the change in control aspect of it really doesn't affect whether or not you think it's probable investing before you make that change, or really even after you make that change, because the change in control piece is improbable at the moment.
13:02
SPEAKER_03: So what we really are focusing on is whatever time or performance-based condition you had before.
13:08
SPEAKER_03: So if it was probable before that you were going to earn the award, adding in the change of control acceleration feature doesn't change that.
13:17
SPEAKER_03: So it's probable to probable.
13:20
SPEAKER_03: It's probably no incremental fair value because that vest adding that vesting feature doesn't wouldn't change the accounting fair value.
13:26
SPEAKER_03: So you'd have no accounting effectively for that.
13:29
SPEAKER_03: But if it wasn't probable that you were going to earn it either because people might have, we thought we people would leave or we weren't going to hit some performance target, then you'd be in the improbable to still improbable situation, because we can't anticipate the change in control.
13:46
SPEAKER_03: And that's a type four change.
13:48
SPEAKER_03: And I think as we described a couple of episodes ago, that would actually be a new measurement date for that award.
13:54
SPEAKER_03: You'd throw out the original grant date value, come up with a new modification date value, and that's the amount that you'd have to take at some point if and when the some vesting condition does ultimately become probable.
14:05
SPEAKER_02: All right.
14:05
SPEAKER_02: Definitely a lot to think about.
14:07
SPEAKER_02: And it's something that I think, you know, we've talked about this in prior episodes, uh, Jay, that sometimes it's better to plan in advance for things that could happen.
14:14
SPEAKER_02: And this definitely sounds like a case.
14:16
SPEAKER_02: You would be better off having this provision uh to begin with, just for ease.
14:20
SPEAKER_02: But Gina, from your perspective, again, sort of seeing it from a practical point of view, what anything you would add here?
14:27
SPEAKER_01: Yeah, so Jay was talking about scenarios where you're selling the full business, but there are many times where you're really divesting of a portion of the business.
14:38
SPEAKER_01: And it's really important to distinguish between those two and the and the accounting considerations for those.
14:45
SPEAKER_01: So, for example, when you're selling the entire business, that's really more of a change of control.
14:51
SPEAKER_01: And that's not probable until it happens.
14:54
SPEAKER_01: But if you're selling a piece of the business, then you have to think about whether you're meeting the health for sale criteria.
15:03
SPEAKER_01: And that could be before the transaction happens.
15:07
SPEAKER_01: Um, and so many cases you'll be in a situation where health for sale is probable.
15:13
SPEAKER_01: And therefore, when we think about the impact on the employees' equity awards, that could be probable as well.
15:20
SPEAKER_01: So thinking about those scenarios and what will happen in that situation when the business is held for sale, what's going to happen with those awards is gonna be really critical.
15:31
SPEAKER_01: So you might be in a situation where we talked about before that employees have equity awards in parent company, they're not gonna complete service and therefore self-forfeit it, right?
15:43
SPEAKER_01: So you might have to reverse expense in that period.
15:47
SPEAKER_01: But there might be scenarios where you know companies do want to modify the awards, you know, like Jay was talking about.
15:56
SPEAKER_01: And they might want to accelerate the vesting in the event of a sale of a business.
16:02
SPEAKER_01: And so if that modification happens, it's and then again, it's key on the timing aspect, like we talked about, if the modification happens when it's already probable that the sale's gonna happen, well, then at that point you're in a type three scenario where effectively the awards were improbable before vesting because they were gonna be forfeited, and then they're probable after as a result of the modification.
16:30
SPEAKER_01: So we have a type three modification, which results in a new measurement of the award.
16:36
SPEAKER_01: But if that modification happens, again, getting to your planning, Heather, right?
16:41
SPEAKER_01: We're thinking ahead.
16:42
SPEAKER_01: Um, if it happens before the transaction's probable, then that would be more of a type one modification, and there won't really be any accounting at that point.
16:51
SPEAKER_01: So definitely agree with the timing aspect and planning ahead as much as possible.
16:57
SPEAKER_02: So, Gina, I have a question.
16:59
SPEAKER_02: So you said, I just want to make sure I got this.
17:01
SPEAKER_02: Let's say I'm selling my subsidiary and it meets the criteria for held for sale, and I don't have a change of control provision in the stock awards.
17:13
SPEAKER_02: So now those employees are going to, I expect they're going to forfeit.
17:19
SPEAKER_02: So at the point in time I move to held for sale, I would account for that as probable to improbable and reverse the expense I had already recognized.
17:29
SPEAKER_01: So at the point where the business is held for sale, at that point the employees, it's the employees that are tagged to the business are no longer expected to complete service because they're expected to be sold with the business.
17:44
SPEAKER_01: And so at that point, their awards are not expected to vest.
17:50
SPEAKER_01: And so there's a forfeiture at that point.
17:52
SPEAKER_01: So we would generally in that period reverse the expense, assuming there's no modification, right?
17:57
SPEAKER_01: At that point, I see.
17:59
SPEAKER_01: Yeah, okay.
18:00
SPEAKER_03: And maybe just to um just to tie loose ends together.
18:05
SPEAKER_03: We haven't really, I don't think, talked about in this series um the notion that a company can make a policy choice between estimating forfeitures or accounting for forfeitures when they happen, which I think Gina was just describing was sort of assuming they were estimating forfeitures.
18:20
SPEAKER_03: So once it became probable that you were selling the business and they were going to leave the parent company before they earned it, then it was you you should update your forfeiture estimate to reflect all of that.
18:32
SPEAKER_03: Um you can make a policy choice to only account for forfeitures when they legally occur, which would be when the people actually terminate and leave the company and forfeit their award.
18:41
SPEAKER_03: But I think we might have talked about in our modifications podcast that regardless of that accounting policy, when you make your assessment of is it probable or not probable when you do a modification, you do have to anticipate your forfeiture estimate in there.
18:55
SPEAKER_03: So it's a little complicated that you can do one thing for your regular accounting and another thing for your modification accounting, but you do, and you have that.
19:02
SPEAKER_03: And we'll run into that a little bit, I think, when we get into the purchase accounting side of things.
19:07
SPEAKER_03: But there's a lot of things at play here.
19:08
SPEAKER_03: And sort of for our listeners who are like how it all hangs together, is that you know, Gina alluded to the help for sale accounting model, uh, which is more about like selling the business and when do you stop depreciating it and remeasure it to net realizable value.
19:24
SPEAKER_03: Well, one of the several criteria for to get to help for sale accounting, along with committing to a plan to sell the business and actively seeking a buyer and things like that.
19:33
SPEAKER_03: Well, one of the criteria is it's probable that a sale will happen within a year.
19:39
SPEAKER_03: And so the thought is: well, if you've concluded that it's probable that the sale will happen and you've moved to held for sale accounting, you can't then argue for compensation purposes that it's not probable, right?
19:51
SPEAKER_03: There has to be alignment between the two.
19:53
SPEAKER_03: And that's why if it's viewed as held for sale and it's not one-for-one lineup.
19:58
SPEAKER_03: But generally speaking, if it's held for sale, that means by definition it's probable of sale.
20:02
SPEAKER_03: So you have to view it as it's probable of sale, which means now it's probable that people are going to leave, they're going to forfeit their awards, and now if you start making changes, you're in that potential type three scenario.
20:12
SPEAKER_03: That's that's part of the very complicated aspects of uh that we're trying to try to draw out here.
20:17
SPEAKER_02: Yes, although I think you and Ken tried to assert as well that something specific was complicated in our last podcast.
20:23
SPEAKER_02: And I I do think I made the point that pretty much all stock comp accounting is is complicated for people who don't do it regularly.
20:31
SPEAKER_02: So um, for our listeners, if you are thinking this is complicated, so am I.
20:35
SPEAKER_02: Um so let me continue on this point though, because Jay, we've been talking up till this point about the accounting for vesting conditions that are tied to the close of a merger.
20:46
SPEAKER_02: However, I know Gina mentioned at the very beginning, often we'll actually see that it will vest after the close because maybe there's an incentive to make sure that employees stay on.
20:57
SPEAKER_02: So how do those types of arrangements work?
21:00
SPEAKER_02: You know, what are some of the accounting considerations?
21:03
SPEAKER_03: So I guess if we thought that last segment was complicated, this might even be uh more complex.
21:08
SPEAKER_03: A whole new ball game point.
21:09
SPEAKER_03: At least in the um in the abstract, although I think it kind of hangs together at the end.
21:14
SPEAKER_03: So so in this case, let's say that we're issuing this new award, we're we want we're selling the business, a piece of the business.
21:22
SPEAKER_03: We want you to stay through closing, and we want you to stay for, let's say, six months after closing to help with the transition of the business.
21:30
SPEAKER_03: And hopefully we get more value out of that because now the buyer sees there's a workforce in place and they don't have to start from scratch, and so you know everybody wins out of that.
21:39
SPEAKER_03: So we have a we issue you an award that says you will earn this award if you if the deal closes and you work for six months post closing for the buyer.
21:50
SPEAKER_03: So what that means is that from your perspective, if you're that employee, uh you've worked some of the time for me as the Seller and some of the time for the buyer, which is not me.
22:04
SPEAKER_03: And so we only recognize compensation expense when you're working for me, providing services for me as the company.
22:12
SPEAKER_03: So we might say, okay, for the portion of time that you're working for my company as the seller, that's compensation expense, and we're sort of taking it over this service period.
22:23
SPEAKER_03: But then for the period of time that you're going to be working for the buyer, well, you're not really doing any work for me.
22:29
SPEAKER_03: Just I've agreed to pay you some money that benefits the buyer, right?
22:34
SPEAKER_03: Now the buyer doesn't have to worry about paying you that special bonus because I'm paying you the special bonus.
22:39
SPEAKER_03: So it's actually viewed as you know, the value that I'm giving you for working for the buyer is actually viewed like a like I'm returning some of the purchase price back to the buyer, right?
22:50
SPEAKER_03: Some of what they paid me, I'm basically giving back to them indirectly by paying their employees.
22:56
SPEAKER_03: And so I actually take sort of an estimate of what that piece would be in added to some forfeiture estimate, let's say again, and I would actually accrue that immediately as basically a reduction of my purchase price and a reduction of my gain on sale, let's say, because you know you might have given me$100 million to buy the business.
23:14
SPEAKER_03: But if I'm going to give$2 million to your employees six months down the road for working for you, it's like you only really gave me$98 million.
23:24
SPEAKER_03: That's my total purchase price, my gain on sale based off of that.
23:28
SPEAKER_03: And the buyer kind of does the same thing in reverse.
23:30
SPEAKER_03: They view that some of what they paid for is really like a prepaid bonus almost, a prepaid compensation amount.
23:36
SPEAKER_03: They would view some of what they paid to be this prepaid and take that as expense as the people work for that six-month period, because they're getting the benefit of people working for them while somebody else is paying for it.
23:48
SPEAKER_03: So it's a it's a bit of an inverted model, but I think when you put the economics together, it kind of hangs together.
23:55
SPEAKER_03: But it's not a good thing.
23:56
SPEAKER_02: Yeah, no, I think the economics make sense.
23:57
SPEAKER_02: That one, that one I actually makes sense to me.
24:00
SPEAKER_02: So let me ask another um question then, because we've been focused sort of on the seller, but obviously there's also, as Jay started talking about, considerations from the buyer.
24:10
SPEAKER_02: And in particular, Gina, you had mentioned at the beginning that sometimes the buyer may issue its own share-based uh payment awards in exchange for awards that are held by uh grantees of the target.
24:24
SPEAKER_02: So employees, I guess, that are coming over.
24:26
SPEAKER_02: So, how, like what does that look like?
24:30
SPEAKER_01: Yeah, absolutely.
24:31
SPEAKER_01: So I would say that the most common flavor that we find on the buyer side is that they're replacing awards.
24:40
SPEAKER_01: And those awards are you know generally exchanged with awards that are gonna be settled in equity of the buyer, in the stock of the buyer.
24:49
SPEAKER_01: Um, so there's generally um, you know, an intent to keep employees whole.
24:54
SPEAKER_01: There's an exchange ratio that's at play a lot of times.
24:58
SPEAKER_01: That's defined.
25:00
SPEAKER_01: Um, a lot of the terms are defined in the specific sale and purchase agreement.
25:06
SPEAKER_01: Um, and so it's pretty clear in terms of you know how those that exchange might happen.
25:15
SPEAKER_01: Lots of different variations um you know generally happens when we think about the specific um, you know, awards, the tranches of the awards and the mechanics of how it actually plays out.
25:28
SPEAKER_01: Um, but ultimately, you know, the employees are really getting equity of the buyer.
25:32
SPEAKER_01: And it's similar to you know, a general equity holder of like the target.
25:37
SPEAKER_01: So what we'll find is, and there might be you know any flavor of this, some of it going to purchase consideration, some of it going to purchase consideration and post-combination expense.
25:49
SPEAKER_01: And depending on scenarios, there might be all of it going to post-combination expense.
25:55
SPEAKER_02: So, Gina, let me ask one question on that.
25:57
SPEAKER_02: Would do we see these types of arrangements both for the scenario of sale of the full company as well as when it's just um divesting or the buyer, I guess, is purchasing just a piece of the business?
26:10
SPEAKER_01: It's most commonly when we have a target and the full business is being sold.
26:15
SPEAKER_01: Um, when we have scenarios where there are divestitures, we'll see some flavors.
26:23
SPEAKER_01: It'll be different, very different because we're not buying the full business.
26:26
SPEAKER_01: Right.
26:26
SPEAKER_01: Um, but there will be some exchange ratio.
26:29
SPEAKER_01: It gets more complicated because that existing equity is still out there for the seller.
26:37
SPEAKER_02: Yeah, okay, that's very helpful context.
26:39
SPEAKER_02: So then, Jay, what's the general accounting model in this scenario?
26:44
SPEAKER_03: Well, you know, it's interesting.
26:45
SPEAKER_03: It's a it's an interesting um spot and gap that we don't probably see too too often, and that sometimes we get to a bit of a split model.
26:54
SPEAKER_03: So, as Gina said, when you're when you're buying a company and the whole company, let's say, and you're buying out all the stock of the company, but then there's also these stock options or restricted stock awards out there, that's viewed to be residual equity of the company you're buying.
27:11
SPEAKER_03: So to Gina's point, you know, what you're trying to think of is like, well, to some degree, what you're buying out is residual equity of the company.
27:17
SPEAKER_03: Well, that smells like purchase price, but to some degree, you're buying out something that might still have future service required.
27:23
SPEAKER_03: That smells like compensation expense.
27:25
SPEAKER_03: So you're the the trick is, and the accounting guidance gives us a model to use to figure out which piece goes to which component of that.
27:34
SPEAKER_03: And oftentimes you end up with elements of both.
27:37
SPEAKER_03: Although the first thing you kind of have to think about is is the buyer, the phrase that the accounting guidance uses, obligated to issue replacement awards.
27:49
SPEAKER_03: Because if you're obligated to issue replacement awards, you can kind of view it as you're partially buying out some equity and maybe partially giving out some compensation.
27:59
SPEAKER_03: But if you're not viewed to be obligated to buy out the awards, then the thought is whatever you give must just be a brand new award because to your brand new employee that you're bringing on as part of the merger.
28:11
SPEAKER_03: And that would just be a plain old, you know, 100% stock comp award, 100% of the expense going through the income statement afterwards.
28:19
SPEAKER_03: So when we think of like what does it mean to be obligated here, uh, it means that there's some legal agreement that the employee and the target company could look to to say the company has to issue these kind of replacement awards and how to swap these things out.
28:37
SPEAKER_03: So that could mean either it's in the award agreement of the target already, right?
28:42
SPEAKER_03: Maybe there's already a provision that says in the event of a change of control of the company, the awards will be assumed by the buyer.
28:51
SPEAKER_03: Or it could be part of the purchase and sale agreement that the parties enter into, even though they just negotiated that, right?
28:58
SPEAKER_03: That wasn't a pre-existing term, of course.
29:01
SPEAKER_03: The parties just came together and said, okay, we're going to pay X for your company and we're going to issue awards to replace all of your target company awards.
29:10
SPEAKER_03: But as long as the agreement is there, now employees can point to that and say buyer is obligated to issue these replacement awards, and then you get to apply sort of the split model accounting.
29:23
SPEAKER_02: All right.
29:23
SPEAKER_02: So, Jay, unlike the earlier scenario where we said, oh, it all kind of hangs together and makes sense, this honestly does not seem like the best outcome.
29:32
SPEAKER_02: So is this the typical result, or there's another way to structure this?
29:38
SPEAKER_03: Well, normally these are we find that they there is an obligation to issue the replacement award.
29:44
SPEAKER_03: So you don't have to do, I said the worst case scenario is you have to view it as a brand new award, all expense to you post-merger.
29:53
SPEAKER_03: Most companies want to try to get as much of it into purchase accounting as they can, into purchase price as they can.
30:00
SPEAKER_03: And so we typically see them sort of be in this, I'll call it split model, where there is a requirement to issue awards.
30:07
SPEAKER_03: And what you do there is the guidance, you know, gives you a model to figure out how much of what you're issuing.
30:17
SPEAKER_03: So you have this fair value of the award that you're buying and a fair value of the award that you're issuing.
30:24
SPEAKER_03: You know, you, the buyer, are issuing.
30:26
SPEAKER_03: And you're trying to figure out how much of that is related to service provided to the target company pre-compensation, because that proportion is more purchase accounting-like for the work they've already done and the equity they've already been earning, versus how much is for the services they're providing post-merger, which would be viewed to be more compensation for services post-merger.
30:55
SPEAKER_03: That's kind of the uh the basic idea.
30:57
SPEAKER_03: Now, it's not a common question we get is like, does it matter if they're legally vested?
31:02
SPEAKER_03: Am I looking at what's legally vested or sort of where am I in the vesting cycle?
31:06
SPEAKER_03: And it doesn't have to be legally partially vested.
31:09
SPEAKER_03: You could be just part of the way through the vesting cycle, and you're still going to do sort of this pre and post before and after split in order to uh to do this allocation.
31:21
SPEAKER_03: And most of the time you're partway through, so you end up with this split.
31:25
SPEAKER_03: So maybe I I maybe see a puzzled look on your face.
31:29
SPEAKER_03: Maybe I'll give a simple example uh for our listeners as to how that might work.
31:34
SPEAKER_03: Um so suppose that the target company had issued awards uh a year ago, a year before the merger takes place, and they had a four-year cliff vesting condition, meaning they all vested 100% after year four.
31:50
SPEAKER_03: Nothing along the way, but all vested after year four.
31:54
SPEAKER_03: In the merger agreement, the buyer agreed to be obligated to issue basically comparable awards on the buyer's stock in exchange for all of these target company awards.
32:06
SPEAKER_03: And all the terms stay the same.
32:07
SPEAKER_03: So you still have to work three more years to get to the vesting date of the original four-year period.
32:14
SPEAKER_03: And at the merger date, let's just assume that the fair value of both the target company's old award and the buying company's new award is$100.
32:26
SPEAKER_03: And so the way that this allocation I describe would work is that you would say that as of the merger date, one fourth of the four-year vesting period has already occurred, right?
32:36
SPEAKER_03: People have worked one year out of a total of four years, so one fourth has already happened.
32:41
SPEAKER_03: So that's considered to be pre-combination service.
32:45
SPEAKER_03: So one fourth of the$100 total value or$25 goes into purchase price.
32:52
SPEAKER_03: And the remaining$75 or three-fourths for the remaining three years they have to work, that would become compensation expense over the three-year service period that they have to finish until they best.
33:07
SPEAKER_01: So that's a great example, Jay.
33:11
SPEAKER_01: And maybe I'll add in, we generally see a lot more complexity.
33:15
SPEAKER_01: So maybe I'll share some of those that we generally will see.
33:18
SPEAKER_01: I think the first one is the notion that this is a modification, like we've touched on.
33:26
SPEAKER_01: And so the company really needs to do a calculation of the before value and the after value and determine if there's any incremental fair value.
33:36
SPEAKER_01: The guidance specifically says that if there is any incremental fair value, that value would go to post-combination expense.
33:44
SPEAKER_01: So I think one of the complexities is not just the allocation, but then also layering into it the modification accounting, doing your fair value before and your fair value after, and seeing whether you have addition an incremental value that needs to get into the post-combination expense.
34:01
SPEAKER_01: The other notion that I mentioned earlier was on the pricing.
34:06
SPEAKER_01: And that is a lot of times this the merger agreement actually specifies a price, but that's not necessarily the price we're gonna use for accounting.
34:16
SPEAKER_01: A lot of times the merger agreement will specifically say to use an averaging of pricing to come up with an exchange ratio.
34:25
SPEAKER_01: That's really just conversion, that's legal.
34:28
SPEAKER_01: And so it's really important to distinguish that.
34:31
SPEAKER_01: A lot of times companies don't, you know, think about that and they're doing the allocation based on that value, but it's really important to distinguish that.
34:39
SPEAKER_01: And sometimes, as a result of that calculation, there is actually some incremental fair value being given.
34:45
SPEAKER_01: So it's really important to take note of that piece and kind of work through the model that way.
34:53
SPEAKER_01: Another area of complexity that we find is related to uh the vesting conditions.
35:00
SPEAKER_01: So sometimes awards will just continue like the target awards, they're just gonna come over and have the same vesting terms, time-based, same vesting conditions.
35:11
SPEAKER_01: But sometimes, you know, they'll either change because of existing provisions that are there for accelerations.
35:21
SPEAKER_01: And so we'll have to be really attuned to those provisions and accelerate those awards.
35:27
SPEAKER_01: And it might be just for specific executives.
35:30
SPEAKER_01: So really knowing, you know, specifically for the certain executives if they have provisions that require accelerations, layering in those accelerations into the model and getting that accounted for.
35:45
SPEAKER_01: But sometimes it's a part of the overall agreement that the buyer might want to change the provisions associated with the vesting.
35:57
SPEAKER_01: And it might be because they want to align the vesting of these awards with the vesting of their own employee group and they want to kind of make a standard process and make the process for future vesting just a simpler process.
36:12
SPEAKER_01: Or they might want to actually, and this is actually a trend that we're finding more, they might want to extend the vesting terms.
36:19
SPEAKER_01: You might be in a situation where you have a fully vested or close to fully vested award that the buyer might want to do re-vesting on those awards and effectively extend the vesting to impact retention, keep them going longer with the company.
36:42
SPEAKER_01: And so, in that scenario, you're gonna have to actually apply the accounting and lengthen, it's gonna, you're gonna have more of that award going to the post-combination expense than it normally would have been.
36:54
SPEAKER_01: The majority normally would have run through purchase consideration for the pre-combination services.
36:59
SPEAKER_01: But now when we're extending the period, we're actually gonna be pushing more into the post-combination period.
37:05
SPEAKER_03: Yeah, those are a lot of very interesting dynamics, right, that we usually uh we often see.
37:10
SPEAKER_03: Not all the time, but but definitely lots of every deal is unique, right?
37:14
SPEAKER_03: For the business reasons you laid out on the front end, everybody's got a different structure uh that you can get to pretty different answers as a result of this.
37:22
SPEAKER_03: And you know, a lot of these, I know Heather, we've talked about in a few of our different podcasts in the series about these anti-abuse type of provisions that the FASB was trying to include.
37:33
SPEAKER_03: And that's a little bit of what they had or were doing here, and that the basic idea is that you can't put into purchase accounting, or you can only put into purchase accounting, which you're actually buying out from the target, what the target had before.
37:48
SPEAKER_03: You know, if you as the buyer want to give the employees a better deal than what they had right before the deal, either give them a better price or more value or shorter vesting provisions or things like that, well, that's viewed to be on your nickel.
38:00
SPEAKER_03: And it's uh you know, you as the buyer's nickel, and you end up taking the cost for that.
38:05
SPEAKER_03: You know, maybe one last other kind of twist that we see a lot uh that makes its way into these calculations all the time is that you know, tying into that discussion earlier about forfeiture estimates and the like, and that regardless of your accounting policy for forfeitures, you you still have to think about the impact of forfeitures and probability when you're doing a lot of your accounting.
38:29
SPEAKER_03: And that's true here as well.
38:31
SPEAKER_03: So we we kind of gone through the split model of how much can go into purchase accounting, how much can go into future compensation expense, but you can only put into the purchase accounting piece, you know, that proportion, that 25% that I used in my example before, but only to the extent that it's probable of vesting.
38:51
SPEAKER_03: So if there's forfeiture estimates that need to be included, or if any of the awards of the target are not probable at the time of the merger, you can't put any of that into purchase accounting.
39:02
SPEAKER_03: You can only put into purchase accounting sort of those, the value associated with the pre-combination services that are expected to vest.
39:11
SPEAKER_03: So if they aren't expected to vest as of the merger date, either because they're just plain old forfeiture estimates over time or because you're it's not probable you're going to hit some performance target, then you can't put any of that into purchase accounting.
39:22
SPEAKER_03: And it basically all has to go into the subsequent expense.
39:27
SPEAKER_03: Once it becomes probable that they are going to earn it, that would all end up as post-combination expense.
39:33
SPEAKER_03: You don't get to go back and adjust your goodwill or adjust your purchase accounting when you figure out later that more of these awards vested than maybe you thought at the time of the merger.
39:42
SPEAKER_01: Yeah.
39:43
SPEAKER_01: And maybe just on that notion of probability, when we talk about performance condition awards, generally what I find with performance condition awards is that the buyer will effectively remove the performance condition and they'll convert into time-based.
40:02
SPEAKER_01: So kind of it'll also impact the attribution accounting that you know the buyer needs to do because this is now only a time-based award versus a performance-based award.
40:14
SPEAKER_01: Um, but generally we find that that notion of performance condition will generally go away.
40:21
SPEAKER_02: All right.
40:22
SPEAKER_02: Definitely a lot to think about.
40:24
SPEAKER_02: And sounds like probably every possible permutation um in these deals.
40:28
SPEAKER_02: And I know you've both seen many, many different things.
40:32
SPEAKER_02: But maybe, Jay, just in terms of other things you would highlight that people should at least look out for when they're involved in these types of transactions.
40:40
SPEAKER_02: What are some other highlights?
40:43
SPEAKER_03: We've definitely touched on it a few times in this podcast, but I think it's probably worth highlighting the impact of some element of discretionary acceleration of vesting coming up.
40:57
SPEAKER_03: And sometimes that's in the form of these dual trigger situations where maybe the award will only vest if there's a change in control and the buyer fires the employee or and the buyer doesn't agree to issue a replacement award.
41:14
SPEAKER_03: So there's some second trigger that has to happen.
41:17
SPEAKER_03: It isn't just automatic, automatic.
41:19
SPEAKER_03: There's some second element.
41:21
SPEAKER_03: Uh, or one of these situations, like I think we talked about earlier, of adding an acceleration feature that didn't exist before, particularly in the time leading up to the closing of the deal.
41:33
SPEAKER_03: Because the guidance talks about sort of assessing what is part of the deal and what should be viewed as not part of the deal.
41:40
SPEAKER_03: Uh, and again, we said you can only put into the deal, you know, the purchase accounting, that which is part of the deal.
41:46
SPEAKER_03: And so there's an important distinction to make here.
41:49
SPEAKER_03: It's not always easy.
41:50
SPEAKER_03: It's certainly a very judgmental assessment about whether whatever it is you're doing is viewed to be for the benefit of the target company and therefore more a part of purchase price, or is it for the benefit of the buyer and therefore part of uh the compensation cost of the buyer?
42:07
SPEAKER_03: The guidance has to look at things like the reasons for doing whatever it is that you're doing and who initiated it and when did it happen in relation to the deal.
42:18
SPEAKER_03: But we often find, I would say, in practice, that any of these discretionary actions that might happen in the period of time shortly before the deal, uh, that that's viewed to be either be driven by or at least uh accepted by or maybe benefiting the buyer, or it's happening so close to the merger date that you really can't overcome that point.
42:44
SPEAKER_03: And so most of these end up being expense of the buyer as opposed to all going into purchase accounting.
42:50
SPEAKER_03: So, for example, one that we run into all the time is this dual trigger provision that would be you know, you only accelerate if the deal happens and you're fired or you don't get offered a comparable position.
43:03
SPEAKER_03: But that basically puts that decision into the buyer's hands, right?
43:07
SPEAKER_03: They get to decide if they're going to keep you or not keep you in what position to offer.
43:12
SPEAKER_03: And so if they decide not to keep you, well, that's benefiting them, presumably through reduced costs of employment and things like that, like any other restructuring decision that a company would make.
43:23
SPEAKER_03: So since it's the buyer that decided to terminate you, and then that's what triggered the acceleration of your award, then it's viewed as that wasn't part of the original terms that you bought.
43:34
SPEAKER_03: That was just a buyer decision.
43:36
SPEAKER_03: So you've got to still go through that same kind of part to purchase accounting, part to comp expense allocation that I talked through.
43:43
SPEAKER_03: It's just now all that stuff that would have come in over time through post merger expense, because I've just accelerated it.
43:49
SPEAKER_03: Now I take immediately.
43:50
SPEAKER_03: So I might take a day one charge for all of that.
43:53
SPEAKER_03: And we do see that happen a lot with these kinds of features whenever there's some element of discretion that's one party or Another has uh has invoked as part of making the deal happen.
44:04
SPEAKER_01: Yeah, Heather, maybe I'll add here as well another scenario that we actually see not uncommonly, which is settling awards in cash.
44:14
SPEAKER_01: So sometimes that could be in the form of at the transaction date, they'll just settle the awards.
44:21
SPEAKER_01: Or in some scenarios, they'll actually take the award and replace it into a cash award.
44:28
SPEAKER_01: Effectively, we're gonna follow the same model that you know Jay's been talking through of doing the allocation between purchase consideration post-combination expense, looking at any accelerating provisions.
44:39
SPEAKER_01: We're still gonna follow effectively the same model, even if it's just a cash award.
44:45
SPEAKER_02: All right.
44:45
SPEAKER_02: So definitely a lot to think about.
44:48
SPEAKER_02: And I know um Jay will know we've been ending these podcasts just with some sort of final words of wisdom.
44:54
SPEAKER_02: So take a step back from the detailed accounting and just sort of final advice that you would give our listeners.
45:01
SPEAKER_02: So, Jay, any thoughts on this topic?
45:04
SPEAKER_03: Well, I guess as we've certainly touched on plenty here today, there's a lot of different issues that can arise here.
45:12
SPEAKER_03: And some of them are pretty unique bits and pieces of accounting, of splitting up awards into different components and the like.
45:19
SPEAKER_03: That's just not what we normally think of as accountants uh to do.
45:23
SPEAKER_03: So uh there's just a lot to be on the lookout for.
45:26
SPEAKER_03: And like a lot of the other topics we've covered all this past month, the the facts and circumstances at the time and sometimes seemingly minor differences in the terms might really matter and impact the accounting quite a bit.
45:42
SPEAKER_03: And so I guess I'd offer for our listeners that if you're in a finance and accounting role, I'd I'd suggest trying to stay abreast of whatever the deals team is negotiating so there aren't surprises later, and we certainly find the negotiations can move and can change pretty fast.
45:59
SPEAKER_02: Yeah, I think that's good advice no matter what part of accounting you're talking about, Jay.
46:04
SPEAKER_02: So, Gina, how about from your perspective?
46:06
SPEAKER_01: Yeah, so firstly, I would completely agree with Jay as well, but maybe I'll take a slightly different angle and think about the employees.
46:15
SPEAKER_01: This is really a big transaction for them and a lot of anxiety associated with this.
46:21
SPEAKER_01: So, really communicating to them um what's happening with their awards.
46:27
SPEAKER_01: And the more complicated there is, I would say what I generally see is participant statements being developed where the employees can see what the awards were on a before basis and what they are on an after basis, and they can really kind of work through the math and get comfortable with how they're being kept whole in the transaction.
46:46
SPEAKER_01: The next piece is the timing.
46:48
SPEAKER_01: I'll say that there's generally a blackout period and really being aligned with that period and when things have to be ready and ready to go in the system, up in live for the employees to see what they have is going to be really critical.
47:03
SPEAKER_01: And the third thing is the stock plan system, but this is more from an accounting perspective.
47:10
SPEAKER_01: I would say that the purchase accounting calculations that we've been talking about, those are all generally done outside of the system.
47:17
SPEAKER_01: All the complexities that we've talked about, understanding the terms of the merger agreement, understanding the, you know, the original terms of the awards, employment agreements, those are all assessed and applied in the purchase accounting model.
47:33
SPEAKER_01: But then it's really important to get that data and upload that data into the stock plan administration system.
47:40
SPEAKER_01: So really getting aligned with the stock plan vendor and understanding their capabilities.
47:45
SPEAKER_01: Ideally, it's great to get the purchase accounting into the system, but sometimes that's not practical and then it doesn't happen.
47:52
SPEAKER_01: At a minimum, getting the post-combination expense into the system up and running so that you know we're working off of a system that's live as opposed to spreadsheets, um, is is really the goal.
48:04
SPEAKER_02: All right, definitely all very good advice.
48:06
SPEAKER_02: So thank you both for all those insights.
48:09
SPEAKER_02: And I will chime in here with where to go for more info that if our listeners are interested, they can definitely check out chapter two of the stock comp guide and chapter three of the bizcom guide.
48:22
SPEAKER_02: Um and now we're up to my favorite part of the podcast.
48:26
SPEAKER_02: And Gina, I believe they warned you that we'd be trying to stump you.
48:30
SPEAKER_02: And Jay will be happy about this, that because it's your first time, we're we're the first questions we're gonna go easy and give a multiple choice.
48:38
SPEAKER_02: Well yes.
48:40
SPEAKER_02: In PwC's most recent polls survey, what percentage of business leaders said that pursuing corporate mergers and acquisitions is critical to achieving growth in 2022?
48:52
SPEAKER_02: So your choices are 35%, 47%, 60%, and 77%.
49:00
SPEAKER_02: Maybe 60%.
49:02
SPEAKER_02: Jay, you want to go with 60 or other thoughts?
49:05
SPEAKER_03: Um I'll I'll I don't know.
49:06
SPEAKER_03: I'll go with the you know the the prices right.
49:09
SPEAKER_03: I guess prices right would be to take the lowest price.
49:12
SPEAKER_03: I'm gonna go with the highest one.
49:12
SPEAKER_03: I'm gonna go with 77%.
49:14
SPEAKER_02: All right, so you're closed, but it's actually 47%.
49:18
SPEAKER_02: So 47% of C-suite executives said pursuing corporate MA joint ventures and alliances is critical to growth.
49:25
SPEAKER_02: Remember, when this was taken, I think there were a lot of other things on people's minds, which is why this is probably not not higher.
49:33
SPEAKER_02: Um, okay, second question.
49:34
SPEAKER_02: This one, there is no um multiple choice.
49:38
SPEAKER_02: So I may have to just share the answer, but it's another good one, Jay.
49:41
SPEAKER_02: So between 1990 and 2010, so it's a 20-year period, what percent of venture capital backed companies returned less than their original investment?
49:52
SPEAKER_02: So basically, I guess failed, leaving employees who opted for stock comp with the painful realization that they may not be part of the next big startup.
50:03
unknown: What would you do?
50:04
SPEAKER_02: So any thoughts again?
50:05
SPEAKER_02: What were you 1990 to 2010?
50:08
SPEAKER_02: And it's basically venture capital-based companies that return less than their original investments.
50:13
SPEAKER_02: I'll I'll just say failed.
50:15
SPEAKER_03: Well, that did include, of course, both the dot-com and as well as against the uh the the last economic recession we had.
50:25
SPEAKER_03: So I bet it's a pretty high proportion.
50:28
SPEAKER_03: And having spent some time out in the uh Silicon Valley area during that time, there was a lot of companies struggling at the time.
50:34
SPEAKER_03: So obviously different, a couple of different economic eras we went through during that phase.
50:39
SPEAKER_03: But I bet to have number the question was number of percentage that failed.
50:43
SPEAKER_03: Percentage that failed, yeah.
50:44
SPEAKER_03: I bet it was um 65%.
50:47
SPEAKER_02: Gina?
50:48
SPEAKER_01: On this one, I'm gonna go higher.
50:51
SPEAKER_01: Um, I'll be the one going higher on this one.
50:53
SPEAKER_01: I'm gonna say uh 70%.
50:56
SPEAKER_01: All right.
50:56
SPEAKER_02: Well, this one, you guys, even without the hint, you were actually closer.
51:01
SPEAKER_02: So 60%.
51:02
SPEAKER_02: So, Jay, you were only slightly over, and that's according to a study.
51:06
SPEAKER_02: So excellent guessing there.
51:09
SPEAKER_02: Definitely would give you full credit for that one.
51:11
SPEAKER_02: So, Jay, Gina, thank you so much for joining me.
51:14
SPEAKER_02: Really appreciate all the insight.
51:16
SPEAKER_03: Sure, thank you.
51:17
SPEAKER_02: Thank you so much.
51:20
SPEAKER_02: That's our show for today.
51:22
SPEAKER_02: We have another industry-specific EHG episode for you tomorrow.
51:27
SPEAKER_02: And then just a reminder that we're on hiatus with our Thursday show until after Labor Day.
51:33
SPEAKER_02: But don't worry, we'll be back next Tuesday with a brand new toolkit series focused on impairment, and we'll be back next Thursday continuing our EHG series.
51:44
SPEAKER_02: So that you never miss any of our audio content, follow the PWC Accounting Podcast wherever you listen to your podcasts.
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SPEAKER_02: From Thought Leadership at PWC, I'm Heather Horn.
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SPEAKER_02: Thanks for tuning in.
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SPEAKER_00: PWC refers to the U.S.
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SPEAKER_00: member firm or one of its subsidiaries or affiliates, and they sometimes refer to the PWC network.
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SPEAKER_00: Each member firm is a separate legal entity.
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SPEAKER_00: Please see www.pwc.com slash structure for further details.
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SPEAKER_00: This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.