The Challenge
An independent water infrastructure company serving Exploration and Production (E&P) companies, faced a significant challenge. They had entered into a contribution agreement where their private equity sponsor contributed their interests, forming a new combined entity segmented into four operating subsidiaries based on location and services. These subsidiaries provided produced water gathering, water disposal, and crude oil gathering services in Texas and New Mexico. The client required a comprehensive business valuation of the four subsidiaries of the business enterprise, as well as tangible and intangible assets, for fair value financial reporting purposes, per ASC 805 – Business Combinations.
Over time, our client required valuations for various transactions, including acquisitions under ASC 805 and the valuation of a newly formed joint venture under IRS Revenue Code Section 704(c) for tax purposes. Additionally, the issuance of management incentive units (MIUs) necessitated quarterly valuations for financial reporting purposes in line with ASC 718 – Stock Compensation.
The Solution
Opportune, with its specialization in the energy industry, provided reliable and defendable valuation services. Our deep understanding of market dynamics, regulatory requirements, and industry-standard valuation methodologies enabled us to meet the client’s needs comprehensively. Our expertise within our Complex Financial Reporting practice helped the client ensure GAAP compliance for financial reporting and tax purposes, providing robust audit support. Additionally, our Corporate Finance practice assisted the client in the pre-acquisition stages of these transactions, helping the client to understand the financial ramifications of the proposed acquisitions.
We delivered in-depth and defensible valuation analyses of the acquired tangible and intangible assets, the business enterprise and allocated equity, as required. Beyond foundational valuation, Opportune's corporate finance group provided strategic guidance on key financial decisions. Our experts provided comprehensive transaction advisory services, assisting with the financial implications of the client's acquisitions and joint venture formation. Concurrently, our complex financial reporting specialists ensured adherence to all FASB and IRS codifications, streamlining the intricate reporting requirements. Throughout our relationship, our integrated valuation, corporate finance, and complex financial reporting groups acted as extensions of the client’s team, tackling complex financial and tax reporting needs with agility, efficiency, and timeliness.