April 2011 Newsletter - Financial Executives International


April 2011 Newsletter - Financial Executives International




APRIL 2011


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


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.”


(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


April 12, 2011:

Career Services: LinkedIn

April 13, 2011:

Professional Development: Annual

CFO Best Practices

Dinner Meeting: Leonard A.

Schlesinger, President, Babson


Strategic Interest Group: Life

Balance in Retirement



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


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


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


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


Kevin R. Rhodes

Plum Choice, Inc.

Vice President

Alan L. Faber

Grant Thornton, LLP

Vice President

Sharon F. Merrill

Sharon Merrill Associates, Inc.


Peter S. Rockett

Greater Boston Chamber of Commerce


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


Timothy J. Coakley

Island Oasis

Membership Involvement

Jacquie D. Arthur

Nakina Systems, Inc.

Membership and Recruitment

John J. Dion

Partner Programs

J. Britton Hutchins


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




(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


The link below challenges

this announcement by

questioning the sustainability

of China’s recent economic


The video can be accessed




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


Julia Davis, Accounting—Roger Williams University

Stephen Gaudet, Accounting & Management—Suffolk


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


Justin Limoli, Accounting—University of Massachusetts, Lowell

Michael Mastrocola, Economics & Accounting—College of the

Holy Cross

Denise Miller, Accounting—University of Massachusetts,


Ross Milne, Economics & Finance—Bentley University

Yulia Podolny, Economics & Finance—Bentley University

Amit Singh, Economics, Finance & Accounting—Boston


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


Amanda Strobel, Finance & Marketing—Northeastern


Joshua Saltmarsh, Finance—Roger Williams University

Katrina Flynn, Accounting—Suffolk University

Raiza Cheng, MIS Finance—University of Massachusetts,




(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


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



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


*To register online, click on the links below.


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

receiving a paper copy of this newsletter.

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



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://


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://


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).

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