We are a leading provider of independent financial advisory and investment banking services. Our mission is to help our clients protect, maximize and recover value by providing independent advice on issues involving highly technical and complex assessments in the areas of valuation, transactions, financial restructuring, disputes and taxation. We believe that the Duff & Phelps brand is associated with experienced professionals who give trusted guidance in a responsive manner. With 878 experienced and credentialed client service professionals at December 31, 2009, we serve a global client base through offices in 23 cities, comprised of offices in 17 U.S. cities, including New York, Chicago, Dallas and Los Angeles, and six international offices located in Amsterdam, London, Munich, Paris, Shanghai and Tokyo.
We provide our services globally to a wide variety of companies that are in need of industry-leading, customized financial advice. Our clients include publicly-traded and privately-held companies, government entities, and investment firms such as private equity firms and hedge funds. Additionally, we maintain extensive relationships with law, accounting and investment banking firms from which we receive referral business.
Our collaborative, team-based culture promotes the cross-selling of new business opportunities across practice groups and enables us to deliver the most appropriate Duff & Phelps professionals to meet a client's needs. In addition, our integrated, multi-disciplinary approach enables us to cross-staff our professionals across multiple service lines to better manage the utilization of our professionals. We believe that our Company’s culture, global scale, broad service offering and strong brand name, provides an appealing career platform that allows us to attract and retain highly qualified professionals.
The foundation of our Financial Advisory segment is our core competency in making highly technical and complex assessments of value. We believe we are one of the leading independent valuation services firms in the world. Services are delivered by client service professionals who possess highly specialized skills in finance, valuation, accounting and tax. We typically price these services based on our assessment of the hours required to deliver the work and the billing rates of the client service professionals assigned to the project. In addition, certain of our property tax engagements are contingency-based.
Financial Reporting. We believe we are a leading independent provider of valuation services for financial reporting. We provide objective and independent valuation reports that allow our clients to meet important regulatory, market and fiduary requirements. Our finance and accounting expertise, combined with our use and development of sophisticated valuation methodologies, fulfill even the most complex financial reporting requirements. Examples of the financial reporting services we offer include: valuations used in conjunction with business combinations and purchase price allocations in conjunction with FASB ASC 805, Business Combinations; periodic impairment testing of goodwill and other intangibles in conjunction with FASB ASC 350, Intangibles–Goodwill and Other; periodic impairment testing of long-lived fixed assets in conjunction with FASB ASC 360, Property, Plant, and Equipment; valuations related to stock compensation in conjunction with FASB ASC 718, Compensation–Stock Compensation; “cheap stock” valuation; and fresh start accounting for companies emerging from Chapter 11 bankruptcy. The acute sensitivity of our clients at the highest levels of the organization to the quality and transparency of the financial information they present to their investors results in strong customer loyalty, which often leads to repeat client engagements and creates an established entry point for the delivery of additional services.
Fixed Asset/Real Estate Valuation. We provide integrated fixed asset and real estate valuations, with specialized expertise in machinery and equipment valuation, fixed asset reconciliation, cost segregation, real estate valuation and real estate consulting. Our services are used for a variety of purposes, including valuation of machinery and equipment for financial and tax reporting and loan/lease structuring; satisfying Sarbanes-Oxley Act Section 404 requirements for fixed asset internal controls; optimizing tax depreciation benefits; assisting corporate clients in reviewing their real estate occupancy strategy in an effort to reduce costs, increase operating efficiencies and raise capital; and various real estate appraisal purposes. Our geographic scale enables us to compete effectively and win large client assignments involving multiple asset sites on a national and global basis.
Tax Valuation.We specialize in tax valuations and related advisory services when tax laws and regulations stipulate that a valuation is required or when assistance is needed to implement a client's tax strategies. We offer tax valuation and advisory services for a variety of transaction-related, compliance and planning purposes, including taxable reorganizations; purchase price allocations; inventory, fixed asset, intangible asset and goodwill valuations; net operating loss and built-in gains analyses; and estate and gift taxes. We have the technical expertise and testimony experience to defend our work and our clients' valuation positions in regulatory inquiries.
State & Local Tax Services. We provide tax valuation and consulting services for a variety of transaction-related, compliance, planning and dispute purposes.
Property tax services – Property taxes are a significant recurring expense paid by companies, but one of the least understood due to the complexity of the applicable tax regulations. We assist companies in identifying opportunities for property tax savings by reviewing their property tax assessments and liabilities. Our services include negotiating assessment appeals, providing property tax due diligence for acquisitions, preparing studies to remove non-taxable embedded costs, obtaining property tax exemptions and providing general property tax consulting and compliance services.
Business incentives advisory – State and local governments often offer valuable tax incentives in return for investments in their jurisdictions. Whether the planned investment will create new facilities, expand or relocate operations, penetrate new markets, result in hiring additional or replacement employees, or initiate research and development activities, business incentives in the form of tax exemptions, tax credits, project grants and other tax benefits may be available at the state and local levels to offset some of these costs. Our strategic geographic network of business incentives experts provides us with specialized, local knowledge of the potential business incentives available to our clients.
Unclaimed property and tax risk advisory – Our professionals combine their extensive experience and technical resources to help our clients manage their unclaimed property responsibilities. We offer services to help clients effectively manage the reporting of unclaimed property, such as audit representation and negotiation, transaction planning and M&A assistance,and outsourcing of the unclaimed property compliance process.
Transfer Pricing. Transfer pricing is a significant international tax issue facing multi-national companies. Most tax authorities require comprehensive transfer pricing documentation, have other compliance requirements and impose severe penalties for failure to comply. Furthermore, transfer pricing presents significant tax optimization opportunities for multi-national companies. We provide a full scope of transfer pricing services to ensure that inter-company transactions comply with required arm's-lengths standards as well as create the contemporaneous documentation to support global compliance requirements.
Dispute & Legal Management Consulting
Dispute Consulting. We offer a broad array of dispute consulting services to corporate clients in a variety of industries.Our professionals provide comprehensive support throughout all stages of a dispute including early case assessment,electronic discovery services, complex data management, forensic accounting and damages testimony. Our experts have provided testimony in a variety of subject matters including bankruptcy and retrospective solvency, business insurance consulting,intellectual property disputes, commercial and shareholder litigation, forensic accounting and investigative services, and purchase price disputes. Our clients include corporations and attorneys from many of the largest and most prominent corporations and law firms in the country. Our professionals have provided testimony in arbitrations, mediations, federal and state courts and on behalf of clients involved in governmental inquiries. In addition to the industry and forensic accounting experts which are a part of our practice, we also maintain an external network of affiliates with specialized kills whom we work with on an as-needed basis in order to provide our clients with comprehensive support.
Legal Management Consulting.We provide various services designed to enable chief legal officers, chief compliance officers and law firm leaders to develop organizational strategy, streamline operations, improve compliance programs and make informed risk management decisions. Legal management consulting services are matched to the specific needs of the client, and have encompassed organizational planning and design, operations improvement, and technology and infrastructure planning. In addition, we assist clients in the development and implementation of a wide variety of records and information management programs, including the creation of records retention and privacy programs. We serve a vast array of industries including financial institutions, entertainment companies, professional service firms, energy companies, utilities, chemical, pharmaceutical, healthcare, industrial, and consumer product companies.
Global Electronic Discovery and Investigations. Our electronic discovery and investigations practice supports the efforts of both the dispute consulting and legal management consulting practices. Our services include computer forensic investigations and expert testimony, litigation readiness and electronic discovery cost containment consulting, complex data management and electronic discovery collection, preservation, processing, analysis, review and production of a wide variety of digital evidence types.
Corporate Finance Consulting
Our Corporate Finance Consulting segment provides consulting services in connection with the valuation of difficult-to-value investments, advice regarding transactions and business growth strategies and consulting regarding business performance measurement and improvement. The foundation of the Corporate Finance Consulting segment is our expertise in the valuation of alternative investments, especially for securities and positions for which there are no “active market” quotations available. Given the significant rise in the number and value of illiquid securities held by hedge funds, private equity funds, pension funds, endowments and corporations, we believe the scrutiny and attention by investors and regulators to fair value reporting standards has increased substantially.
Our portfolio valuation client service professionals specialize in assisting the alternative asset management community with investment and reporting issues, including: portfolio valuations, “best practices” consulting, general partnership valuations, secondary market transaction valuations, and operational risk due diligence. Our portfolio valuation clients include investors in illiquid and restricted securities, including private equity firms and hedge funds. The majority of our clients’ illiquid portfolios are comprised of secured and unsecured loans and other debt instruments, privately held preferred equity and common equity, convertible securities, warrants and options, structured products, OTC and other derivative securities. Similar to our corporate clients, our alternative asset community clients are under intense scrutiny regarding their fiduciary duties to their investors/constituents, which has prompted many of these firms to obtain outside assurances on the valuations of the investment portfolios for which they are responsible. Conflict of interest considerations typically prevent any accounting firm that has an audit relationship with a portfolio company from rendering valuation advisory services on the entire portfolio. As a result, we typically do not compete with large accounting firms, such as the four largest international accounting firms (i.e., the “Big Four”), in providing these services. We typically deliver these services on a recurring basis. We believe we are a market leader in portfolio valuations, which provides us with an attractive opportunity to increase our revenues in this practice group and increase our brand equity and recognition within the alternative asset community.
New financial processes and sophisticated quantitative models are transforming the way investors analyze and manage risk, price financial instruments and evaluate business strategies. Our financial engineering practice provides the valuation advice investors use, including valuation of alternative and derivative instruments, to enhance their ability to identify, control, diversify, mitigate and exploit risk. Financial engineering analyses and valuations can be used to support financial reporting, tax planning, risk management, securities design and investment decision making. We draw upon the latest developments in finance theory, mathematics and computer science to design and evaluate financial instruments that help achieve investors' goals. Financial engineering services include auction rate securities valuation; derivatives valuations pursuant to FASB ASC 815, Derivatives and Hedging; alternative assets valuations pursuant to FASB ASC 820, Fair Value Measurements and Disclosures; and valuations for employee stock options and incentives pursuant to FASB ASC 718, Compensation–Stock Compensation.
We provide buy-side and sell-side transaction advisory services to private equity and strategic buyers. Our professionals assist with the accounting, financial, commercial, operational, tax and information technology aspects of the due diligence process by developing and executing a due diligence plan that focuses on the key value drivers and risks that are critical to our clients' investment or divestiture decisions. Our independence allows us to provide a broader and deeper array of services to our clients than their audit firms. Our ability to collaborate across D&P practices also creates a more efficient and cost effective process. We have expanded our services to include interim financial management (CFO, controller, etc.), working capital and cash flow analysis/forecasts, performance analysis and benchmarking, lender analyses, covenant reviews, IPO related assistance (helping prepare management’s discussion and analysis, pro-forma financial statements and footnote disclosures) and operations analysis . These services enable our clients to obtain further transparency into their investment portfolios and enhance their ability to proactively make investment lifecycle decisions.
Strategic Value Advisory
Our strategic value advisory practice helps clients improve ongoing performance, optimize their transaction and investment strategies, and enhance fundamental company value. Whether a company is contemplating a transaction, allocating capital, addressing profitability or liquidity issues, or weighing alternative growth strategies, we provide advice and management tools based on a rigorous valuation-oriented perspective. We advise management and boards of directors of companies that are evaluating strategic alternatives, looking to raise capital, or considering mergers, acquisitions, joint ventures or divestitures. We also help companies address profitability and operational issues, value contingencies, and allocate limited capital. We assist clients in understanding and maximizing value by applying industry experience, know-how in corporate finance and capital markets, accepted valuation methods, risk assessment and forecasting tools, financial modeling best practices and sophisticated analysis. Our professionals also have deep expertise in assisting alternative asset managers with the complexities of initial public offerings and large institutional investors with securitization transactions.
Our Investment Banking segment focuses on providing services through our global restructuring advisory, transaction opinions and M&A advisory business units to corporate and investor clients. A significant portion of revenues in this segment are generated from success-based fees that are paid when a transaction closes and are generally tied to the value of the transaction. As a result, revenues in this segment can be less predictable and more event-driven than revenues in our Financial Advisory segment. However, projects in this segment have the potential to generate higher revenue per client service professional, thereby resulting in higher margins.
Global Restructuring Advisory
Our global restructuring practice provides financial restructuring advice to all constituencies in the business reorganization process, including debtors, senior and junior lenders, existing and potential equity investors and other interested parties for clients domestically and internationally. Our services include strategy, plan development and implementation, working capital forecasting and management, exchange offers and consent solicitations, out-of-court workouts, Chapter 11 restructurings and debtor-in-possession and exit financing advisory services. Since 1984, our restructuring advisory practice, which includes our subsidiary Chanin, has advised hundreds of clients in transactions valued collectively at over $249 billion (actual dollars).
Our independent fairness and solvency opinions help provide boards of directors and other corporate fiduciaries with alegally defensible basis to support important corporate decisions. Our ability to offer opinions that satisfy all constituencies, including regulators, has been developed through extensive research, detailed financial analyses and a commitment to stay current on key governance and regulatory issues. In recent years, we believe our fairness opinion practice has benefited from an increase in the perceived standard of diligence required by boards of directors to adequately satisfy their fiduciary duties, particularly when faced with financial advisors who may have conflicts arising from the receipt of success-based transaction advisory or financing fees in conjunction with sell-side advisory assignments. Finally, we believe we are one of the leading financial advisors in transactions involving benefit plans, including employee stock ownership plans (“ESOPs”). We have a strong background in resolving the unique financial, valuation, tax and structural issues involving employee benefit plans under the Employee Retirement Income Security Act of 1974 (“ERISA”), and also provide recurring ERISA/ESOP valuation services for our clients on a periodic basis.
We provide objective valuation, structuring and negotiation services tailored to help our clients achieve their strategic goals on the best possible terms. We have developed our expertise through hundreds of sell-side, buy-side, divestiture and capital raising assignments across a wide range of industries. We provide our services primarily to middle-market clients,including the portfolio companies of our private equity clients, focusing primarily on transaction values ranging from $20 million to $1 billion (actual dollars).