21 November 2016

Public Works Can’t Clean up this Mess

How the leases you sign may affect bond ratings

  • FASB and IASB have amended accounting guidance (ASC 842) to provide more transparency for lease transactions.
  • Breaking with tradition of adopting FASB standards, GASB appears poised to adopt the IASB single-lease approach over the FASB method.
  • If that happens, the new accounting standards will require governments to recognize all lease obligations on their balance sheets and monitor the effect of these changes on their debt-to-capital ratio and related bond covenants.
  • GASB has not yet ruled, but evidence suggests that reporting will begin in 2020 (with back reporting beginning in 2018 for most private, government, non-profit agencies).
  • This change is an opportunity to better manage accounts payable for leases and communicate to the market a mastery of good financial governance, or a risk that could negatively affect debt ratings, cost of debt and the availability of credit.
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1 September 2016

Who’s got a better multiple than Waze? Your Own City.

  • Technology, implementation of that technology and viable financial business models are beginning to align for governments to capitalize on new opportunities.
  • The influx of residents to city centers provides challenges to infrastructure, but also opportunities to mine and monetize data.
  • Traffic continues to be the greatest pain point for residents but also opportunity for relief by utilizing aggregated data.
  • Open Data has unlimited potential to improve cities, offering significant economic value to the community and private investors.
  • The current Achilles heel of Smart Cities is clarity around creation of a viable financial business model that balances the privacy of the citizenry, with an economic return to all parties.
  • Public-Private partnerships appear to be the clearest path forward.
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27 May 2016

Human Resource Planning for the Unplanned – How North Carolina Has Prepared for the Next Generation of Government

Best of Series – Part 1

  • Baby Boomers are reaching the age of retirement at record rates and by 2025 Millennials will make up three-quarters of the American workforce.
  • Because employees within Government positions are older on average, the public sector needs to have workforce planning in place to transfer vital knowledge before it is lost.
  • Millennials are looking for opportunities where they can make a difference, are motivated by empowerment and consistent feedback, and value a work-life balance.
  • Georgia has shown a 27% increase (year over year) in public sector retirements – significantly higher than other states in recent years.
  • In order to compete with the private sector, State and local agencies will need to look for effective ways to not only recruit, but develop and retain a new generation of young talent.
  • The State of North Carolina offers several best practices in many of these areas through enhanced postings on GovernmentJobs.com, their Young Employees Initiative (YEI) and the North Carolina Valuing Individual Performance (NCVIP) programs.
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16 May 2016

Warren Buffett Wants to Make You Better in 2016

What I learned from the Berkshire Hathaway 2015 Annual Report

  • Tenor of American politics diminishes great advances in the U.S.
  • Investment strategies of adding to existing business lines and underwriting risk based on actual default risk as opposed to competition still work and should be encouraged.
  • Accurate accounting shouldn’t disregard relevant charges in favor or EBITDA valuations.
  • Success comes from staying in your lane. For Berkshire, this means friendly acquisitions, large purchases and partnership with like-minded long term holders of companies.
  • Burlington Northern Santa Fe, Insurance and Clayton Homes business all improved in a diminishing market, but conditions for the insurance market look difficult in the next ten years.
  • The shareholder meeting will be simulcast for the first time this year. Details are below.


Executive Summary

Warren Buffett, inarguably one of the most successful investors in history, released his annual letter to the shareholders of Berkshire Hathaway in late February 2016.  The annual report he publishes through his conglomerate, Berkshire Hathaway, is one of the most highly anticipated and widely read in the financial world.

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16 May 2016

The Regulator: The State of Healthcare in Georgia

On March 18, 2016, the Georgia Association of Healthcare Executives sponsored a closed door session for C-Level Executives throughout the state to hear perspectives from two insiders: Harold Kirtz, Senior Litigator for the Federal Trade Commission, and Mr. Will Melson, President of the Broadwell Group. The discussion went long, but here’s half of what was shared from a regulator’s perspective. Please note that any comments by Harold Kirtz are not necessarily the views of any individual Commissioner or of the Commission as a whole.

Q: What things does the FTC look for in its jurisdiction over mergers and acquisitions?

A:  We look for whether the merger or acquisition will substantially lessen competition in a particular market.  We have to determine what the product or service market is, what the geographic market is, what concentration is there among the current players in the market, and whether there is the likelihood of substantial entry by new or expanding players in the market. 

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2 May 2016

The Dealmaker: The State of Healthcare in Georgia

On March 18, 2016, the Georgia Association of Healthcare Executives sponsored a closed-door session for C-Level Executives throughout the state to hear perspectives from two insiders:  Harold Kirtz, Senior Litigator for the Federal Trade Commission, and Mr. Will Melson, President of the Broadwell Group. The discussion went long, but here’s one half of the story from a dealmaker’s perspective.

Q: What is the actual “state” of Mergers & Acquisitions?

A: While none of us have unlimited funds, healthcare professionals struggle with the idea there’s a lot of things I “could” do, but what “should” I do? When it comes to mergers & acquisitions, you’re probably presented with a lot of opportunities to consider – should we join? Should we buy? Should we merge? Should we integrate?

I think we’re in the middle of it. And when you’re in the middle of all this change, it’s sometimes a little hard to figure out. Should we go with a population health management? Should we do something with a payer plan?   We see a lot of health systems that will dabble in something that looks like a plan.

You would have thought that in 2010, M&A was on a huge tear. And even up to 2014, you’re thinking there’s no way it can be any bigger. Last year was a 66% increase of M&A activity in Healthcare. Even nationwide – Wall Street Journal reported there were over $2 Trillion of mergers.

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7 March 2016

Chinese Yuan Moves East Atlanta Property Values

Global instability, interest rate insecurity and economic indicators for Georgia property tax revenues

  • Global economic indicators do not universally support a national contraction.
  • Fed’s interest rate increases, emerging market declines and a stronger U.S. dollar are weakening demand abroad, but the weakening is disproportionately borne by energy and heavy industrials like Exxon.
  • In 2015, Georgia realized a net gain of 92,900 new jobs, home sales up 7%, along with population and employment growth that is outpacing the domestic figures.
  • Interest rates have hurt property values in the past, but in Georgia, a shortage in supply and aforementioned economic factors should overshadow downward pricing pressure from interest rates.
  • Analysis concludes that national (and even more so local) economic fundamentals point toward further expansion of property values—and therefore property tax revenues—through 2017.
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