April 2011 Newsletter - Financial Executives International

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FINANCIAL EXECUTIVES INTERNATIONAL
BOSTON CHAPTER NEWSLETTER
APRIL 2011
LETTER FROM THE PRESIDENT
Greetings, Fellow FEI Members!
There’s a hint of spring in the air and Opening Day has finally
arrived. So, why not get into “full swing” at one of FEI’s April
Events planned!
Here’s a quote for you to ponder: “If we had no winter, the spring
would not be so pleasant: if we did not sometimes taste adversity, prosperity would not be so
welcome.” - Anne Bradstreet
First and foremost, a sincere efharisto (thank you) to John Hatsopoulos, CEO of American DG
Energy, Inc. for joining us as our March keynote speaker and sharing his “energetic” words of
wisdom.
Our “leadoff hitter” for the month is our Career Services event on April 12, 2001. Marilyn
Santiesteban, Director of Career Services at King & Bishop, will focus on “Using LinkedIn as a
Strategic Tool.”
ABOUT OUR SPEAKER
(Continued on page 3)
Leonard A. Schlesinger became the 12th president of Babson College
on July 1, 2008. He came to Babson from Limited Brands,
where he served in executive positions from 1999 to 2007, most
recently as vice chairman and chief operating officer. From 1985
to 1988, Schlesinger was executive vice president and chief operating
officer at Au Bon Pain. His academic career includes 20
years at Harvard Business School, where he served as the George
Fisher Baker Jr. Professor of Business Administration, leading MBA and executive-education
programs. He also was architect and chair of Harvard Business School’s MBA Essential Skills
(Continued on page 3)
this issue
Letter from the President P.1
About Our Speaker P.1
Partners Corner P.2
Officers and Directors P.2
Membership News P.3
International News P.3
FEI Scholarship P.4
Chapter Partners P.4
Helpful Links P.5
Upcoming Meeting & Events P.6
Committee News P.6
Contact FEI P.6
SAVE THE DATES
April 12, 2011:
Career Services: LinkedIn
April 13, 2011:
Professional Development: Annual
CFO Best Practices
Dinner Meeting: Leonard A.
Schlesinger, President, Babson
College
Strategic Interest Group: Life
Balance in Retirement

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PARTNERS CORNER
Maximizing Value Through the
Integration of Transfer Pricing
and Purchase Price Allocation
Companies involved in a business combination
typically prepare one analysis that
determines the fair value of assets and businesses
for financial reporting purposes, and
a separate analysis to determine the price
that should be charged when assets are
transferred between related entities. Performing
these studies separately can lead to
the use of inconsistent assumptions, inputs,
and approaches that can bring about avoidable
risks and penalties.
Transfer Pricing (TP) and Purchase Price
Allocation (PPA) valuations are applied
differently but are based upon the same
premise. When prepared together, the studies
can support each other and provide
taxpayers with a strong basis in defending
their position if an audit is performed. Other
areas where benefits can be derived from
valuation and TP professionals working together,
include restructuring, due diligence,
and merger and acquisition planning.
Benefits of Preparing Transfer Pricing and
PPA Analyses Jointly
1. Technical Efficiencies
a. Different TP structures: Very often an
acquired company operates under a TP
structure that is different from the
acquirer’s TP structure – and the postacquisition
plans of the company may
involve converting the acquired company’s
operations into the acquirer’s TP
structure. This could affect both the
projected cash flows and risks faced by
the specific legal entities being
acquired.
b. Pre-tax versus post-tax: In general, PPA
values are calculated using the present
value of after-tax cash flows, and then a
tax amortization benefit is added if the
particular asset can be amortized and
provide a tax benefit to the acquirer. TP
values are calculated using the full taxable
income (i.e., pre-tax).
c. Reconciliation: Clients, their auditors,
and tax authorities may request a
“reconciliation” be performed to explain
any differences between a PPA value
and a TP value. Performing these
analyses together can make the reconciliation
exercise much easier to explain.
d. Implications for buy-ins: Postacquisition
buy-in payments, which
require valuing the contribution of
acquired IP to an existing cost-sharing
arrangement, will often result in side-by
-side comparisons between the value of
the acquired IP as determined for the
PPA and for tax/TP purposes. Performing
these analyses together can
minimize the differences that remain
between the two conclusions and aid in
reconciliation.
e. Discount rates: Discount rates reflecting
the systematic risk of a given set of cash
flows should be the same, whether used
for PPA or TP purposes. Thus, a joint
determination by the PPA and TP team
regarding the appropriate discount
rate can result in greater efficiency in
the overall project.
2. Cost Efficiencies
a. Fact finding: Joint fact-finding calls (e.g.,
about the nature and economic life of
acquired technology) can reduce duplicate
efforts and cost to the client.
b. Company data development efforts:
Most financial information (e.g., projected
cash flows) can be used jointly by
the PPA and TP teams, so a single data
request can be prepared to streamline
efforts.
c. Tax valuation – legal-entity valuation:
Any other post-acquisition needs of the
client (e.g., tax or legal-entity
valuations) can often be performed
concurrently, saving additional duplication
effort and costs.
(Continued on page 5)
2010–2011 Officers
President
Kevin R. Rhodes
Plum Choice, Inc.
Vice President
Alan L. Faber
Grant Thornton, LLP
Vice President
Sharon F. Merrill
Sharon Merrill Associates, Inc.
Treasurer
Peter S. Rockett
Greater Boston Chamber of Commerce
Secretary
Karen Edlund
2010–2011 Directors
Academic Relations
Bernice Bradin
Lesley University
Career Services
Paolo Castelli
Agere Enterprise Management
Chapter Communications
Kevin P. Walsh
Hill Holliday
Diversity
Timothy J. Coakley
Island Oasis
Membership Involvement
Jacquie D. Arthur
Nakina Systems, Inc.
Membership and Recruitment
John J. Dion
Partner Programs
J. Britton Hutchins
Vistagy
Meeting Programs
Perry W. Morton
Baldwin & Clarke Corporate Finance, Inc.
Professional Development
Edward J. Keefe
M/C Venture Partners
Special Events
Mark J. Sullivan
Markley Group
Director Emeritus/
Advisor Board Initiatives
F. Gorham Brigham, Jr.
——————————————————
Chapter Administrator
James P. Andersen, Jr.
Foundation Management Associates
Tel: (781) 248-5759
E-mail: jandersen@feiboston.org

LETTER FROM THE PRESIDENT
ABOUT OUR SPEAKER
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(Continued from page 1)
Mark your calendar for April 13, 2011: we have quite the game plan – all under one roof.
Our Professional Development session will focus on CFO Best Practices. Please join us to
hear a distinguished panel of cross-industry/functional leaders discuss how today’s CFO is
managing risk through best-practice initiatives.
Same-time, same-place, April 13, 2011 is our latest installment in our Special Interest
Group’s Retirement series, “Life Balance in Retirement.” We will welcome Jim Shattuck
once again. This series of seminars is perfect for our members who are retired, soon to be
retired, or beginning to think about planning for retirement. This program is FREE for our FEI
members and their spouses.
Also that afternoon, FEI’s Academic Relations Group will proudly honor 25 college students:
this year’s FEI scholarship award recipients. Many of them, along with their faculty advisors
and family members, have been invited to April’s dinner.
Our “grand slam” for the evening will be our Dinner Meeting on April 13, 2011. Our keynote
speaker is Leonard A. Schlesinger, President of Babson College. Come join your fellow FEI
members, to network and congratulate our scholarship recipients in person!
Recent job change? New e-mail address? Please make sure your FEI profile is up to date. It
is password-protected, so only you can make changes. This will ensure that timely FEI news
finds you and…extra bonus… your name tag is accurate at all FEI events. Just couldn’t make
it to one of our recent sessions? Remember, presentations of many of our programs are
available online on our website. Read them anytime, anywhere. Just click.
Game schedule for later in the season also looks bright! Mark your calendar for two very
special year-end events: FEI’s Night at Fenway on May 25, 2011 with Rico Petrocelli, and our
CFO Ethics Summit on June 23, 2011.
Hope you can join us this month!
Kevin Rhodes
President, FEI Boston
(Continued from page 1)
and Foundations programs. Leonard Schlesinger is well known for his pioneering research
and publications on the “Service Profit Chain.” He is the author or co-author of 10
books and has written more than 40 articles for academic audiences as well as for The
New York Times, Fast Company, and Harvard Business Review. President Schlesinger
currently serves as a member of the board of directors of the Network for Teaching Entrepreneurship
(NFTE), a board member of the BJ’s Wholesale Club, Inc., a member of
the Board of Directors of the Massachusetts Clean Energy Center, a member of the
corporation of the Winsor School, serves on the Board of Managers for StriVectin Holdings,
LLC, and is a member of the President’s Council of the Franklin W. Olin College of
Engineering. He also serves as an Advisory Council Member of The 10,000 Small
Businesses Initiative, as well as a member of the Council on Competitiveness, and is a
member of the Council on Foreign Relations. Schlesinger earned a Doctor of Business
Administration from Harvard Business School, an MBA from Columbia University, and a
BA in American Civilization from Brown University.
New Members!
FEI would like to extend a
warm welcome to our new
members who joined FEI in
March 2011:
Juan Morales
William Peressini
Edward Resch
International News!
Last month, it was
announced that China
surpassed the United States
as the world’s leading
manufacturer.
The link below challenges
this announcement by
questioning the sustainability
of China’s recent economic
boom.
The video can be accessed
here.

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FEI SCHOLARSHIP!
The 2011 FEI Academic Scholarship Awardees have been announced, and the scholarships will be presented at the April 13 meeting.
Students majoring in Accounting, Finance, or Economics are eligible to compete for the scholarships, which recognize outstanding
academic scholarship, leadership, and extracurricular achievement in the areas of school and community activities, sports, and work. We
also recognize an Outstanding Graduating Senior, nominated by the faculty from each submitting school.
The 2011 Scholarship Awardees are:
Michael Canfield, Finance, Economics & Accounting—Boston
College
Julia Davis, Accounting—Roger Williams University
Stephen Gaudet, Accounting & Management—Suffolk
University
Vladimir Groysman, Finance & Accounting—Boston University
Erjola Hoxha, Accounting—Suffolk University
Allauki Janani, Finance & Economic—Babson College
Samuel Landsberg, Finance & Entrepreneurship—
Northeastern University
Kirsten Lenthe, Business Management/Accounting—Babson
College
Justin Limoli, Accounting—University of Massachusetts, Lowell
Michael Mastrocola, Economics & Accounting—College of the
Holy Cross
Denise Miller, Accounting—University of Massachusetts,
Lowell
Ross Milne, Economics & Finance—Bentley University
Yulia Podolny, Economics & Finance—Bentley University
Amit Singh, Economics, Finance & Accounting—Boston
University
Chapter Partners
The 2011 Graduating Senior Awardees are:
Todd Rothlisberger, Finance—Babson College
Alexa Kaklamanos, Accounting—Bentley University
Robert Monaco, Finance & Accounting—Boston College
Yuliya Batalova, Accounting & Finance—Boston University
Catherine Gabix, Finance—Clark University
Laura O’Neil, Economics & Accounting—College of the Holy
Cross
Amanda Strobel, Finance & Marketing—Northeastern
University
Joshua Saltmarsh, Finance—Roger Williams University
Katrina Flynn, Accounting—Suffolk University
Raiza Cheng, MIS Finance—University of Massachusetts,
Boston

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PARTNERS CORNER
(Continued from page 2)
3. Reduces risk and avoids penalties
a. Consistent assumptions: Arriving at a
consistent set of assumptions minimizes
the risk (both for the client and service
provider) of having certain assumptions
or conclusions for financial reporting
purposes that differ from (or have negative
implications for) positions that the
client has taken, or wishes to take, for
tax/TP purposes.
b. Avoiding penalties: This could help
avoid penalties, for example, where a
company might otherwise have taken a
position for financial reporting purposes
that conflicted with a prior position
taken for tax/TP purposes.
The Duff & Phelps Approach
PPAs provide a good starting point for a TP
analysis. The TP team can review the PPA
performed to determine if changes need to
be made to comply with TP requirements.
Ideally, the TP team will be involved early,
including during the fact-finding phase of the
PPA, to ensure that positions and assumptions
taken for the PPA are consistent with
the company’s current and anticipated TP
structure. Each company’s situation is
different and advisors need to tailor each
engagement upon extensive prior experience,
yet recognizing the unique value
drivers inherent in each transaction or situation.
Understanding the synergies between PPAs
and TP, and using an integrated team approach
to perform the analyses, will provide
taxpayers with a stronger basis for supporting
their audit positions as well as saving
time, money, and resources.
For additional information, please contact
Tim Reichert, Transfer Pricing Services
Leader, at 303.749.9002 or Myron
Marcinkowski, Tax Valuation Services
Leader, at 678.916.2525.
$100,000 IRA Gift to Charity—
Make Sense?
With the passage of The Tax Relief Unemployment
Insurance Act of 2010, allowing up to
$100,000 of IRA assets to be donated to charity,
many 501(c) institutions have mailed their potential
donors to encourage the use of this tax
benefit. But, is this the best way for donors to
give?
For donors who have long-term capital gains
assets, it is still more advantageous to donate
capital-gains assets directly rather than donating
one’s IRA. To illustrate:
Has $100,000 in IRA not needed for
retirement
and
Donor has $100,000 of appreciated, long -
term capital gains stock which was purchased
for $10,000
1. If $100,000 in IRA is donated to charity –
no taxes are paid. No deduction allowed.
When the long-term capital-gains asset is
eventually sold, $18,000 would be paid in
taxes (15% federal & 5% state) leaving
donor with $82,000 in cash.
2. If the long-term capital-gains asset is donated
to charity, the donor receives a
$100,000 tax deduction. If the IRA then
disburses $100,000 as a distribution, it is
taxable income. This taxable income will
be offset by the gift of the $100,000 longterm
capital-gains asset, leaving donor
with $100,000 cash, not the $82,000.
Conclusion: Gifts from IRAs are useful, but with
other assets from which to give, it may be more
advantageous from a tax perspective to gift the
assets and keep your retirement money.
For more information, please contact, Ed
Wallack, President of Sapers & Wallack, at
617.225.2600 or ewallack@sapers-wallack.com.
Other Helpful Links:
FEI National FERF
FEI Boston Career Center
FEI National Career Center
Meetings and Events
Member Directory
Advocacy and Current Issues
FEI National Webcasts
Connect with FEI:
FEI National LinkedIn
Blog Twitter
News Twitter
FEI National Blog

UPCOMING MEETINGS & EVENTS
*To register online, click on the links below.
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Dinner Meetings:
April 13, 2011: Leonard A. Schlesinger , President, Babson College
May 25, 2011: Rico Petrocelli, former Boston Red Sox star, Fenway Park
Professional Development:
April 13, 2011: Annual CFO Best Practices
May 18, 2011: IPO something something
Career Services:
April 12, 2011: LinkedIn
Special Interest Groups:
April 13, 2011: Life Balance in Retirement
May 18, 2011: Retirement Focus
FEI has now completely gone green! You are no longer
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Please ensure that your e-mail address is correct by logging on to
boston.financialexecutives.org and updating your information.
One Adams Place
859 Willard Street, Suite 400
Quincy, MA 02169
(781)353-6488
Boston.financialexecutives.org
Committee News
Membership Involvement
The Membership Involvement Committee
is continuing to run Special Interest
Groups (SIGs). Two meetings of the Retiree
SIG are planned.
April 13, 2011
Newton Marriott
2:30pm – 5:00pm
Hosted by Jim Shattuck, “Working Differently”.
During this seminar, Working Differently
will help start you thinking about
a life/work balance and the mix of personal
and professional activities that
makes sense to you. Register at http://
retiresigapril.eventbrite.com/
May 18, 2011
Newton Marriott
3:00pm – 6:00pm
Panel Discussion: “Financial & Legal Considerations
in Retirement” presented by
Sapers & Wallack. A panel of experts discusses
financial, insurance and planning
issues encountered in retirement. After
this program, enjoy networking with your
peers while hors d'oeuvres and cocktails
are served. Register at http://
retiresigmay.eventbrite.com/
Special Offer for FEI Retired Members -
Stay for the FEI Dinner (member rate $55)
or even better, bring your spouse along
(Dinner for Two $100).