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Artificial intelligence (AI) has spurred M&A volume in 2024, according to Dykema, noting 55 transactions targeting AI startups during the first quarter compared with 38 during the final quarter of last year. More than 70% of dealmakers expect that mergers and acquisitions in the next 12 months will target companies that sell AI infrastructure or that either offer AI solutions or have successfully deployed the technology, Dykema found in a survey of 235 executives focused on M&A. Company valuations and the line-up of M&A targets have improved compared with last year, according to Dykema, citing its survey. Still, dealmakers said competition among buyers persists as a headwind to transactions. “The institutions and funding and talent and mechanisms are in place for M&A to reach new highs, and the M&A industry is dominated by optimists,” said Frank Ballantine, an M&A lawyer at Dykema. “But when and exactly how new highs will be reached would require an LLM [large language model] that I don’t know of anyone having developed.”

 

CFO Dive

EY is leveraging its $1bn investment in technology and talent to expand the use of artificial intelligence (AI) and machine learning. The Big Four firm has been using a general ledger (GL) anomaly detector and is now embedding AI capabilities in its GL analyzer. "In that tool, we're now embedding online detection with time series regression to really go to the next step," said Marc Jeschonneck, EY's global assurance digital leader. It is also using AI for workflow recommendations. "All the firms have their own platforms, and so do we with EY Canvas, with more than 500,000 users in total clients as well as EY professionals," said Mr. Jeschonneck. "We really embed with Canvas AI a recommendation engine into this platform." It can help when identifying risks, harvesting news alerts and looking into ratios and KPIs of various sectors.  "What we have here is the technology enabling our people, in the hands of professionals who are skilled and have access to the right training making the best use of the technology that we have. Technology really gives new opportunities to the people."

 

Accounting Times

Accounting Today

BDO USA has partnered with Everlaw, a cloud-native investigation and litigation platform, to enhance e-discovery and litigation support globally. This collaboration aims to provide legal departments and law firms worldwide with advanced tools to navigate complex data landscapes effectively. “Our clients depend on us to help them uncover relevant facts for litigation, regulatory, and compliance matters – separating the signal from the noise", said BDO E-Discovery Managed Services team principal and leader Daniel Gold. “Everlaw is an ideal addition to our suite of tools, permitting BDO to efficiently tackle the toughest data challenges and deliver optimal outcomes for our clients."

 

International Accounting Bulletin

CVS Health has announced that David Joyner will take over as chief executive, replacing Karen Lynch. Joyner has been president of CVS Caremark, the company’s pharmacy-benefit manager, as well as an executive vice president of CVS. Roger Farah, chairman of CVS's board of directors, has also become executive chair. CVS is making the changes after repeatedly cutting its forecasts for this year’s financial performance, moves that led to a 19% decline in its share price this year as of Thursday’s close. The firm is now planning to announce third-quarter results well below expectations, largely due to continued losses at its Aetna insurance unit. In a statement, Farah said: "We believe David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces, more rapidly advance the operational improvements our company requires, and fully realize the value we can uniquely create."

 

USA Today

NBC News

The New York Times

The Wall Street Journal

As the November election approaches, tax professionals are considering strategies to navigate the differing proposals of candidates. Ian Boccaccio, principal at Ryan, highlights the stark contrast: "If the Democrats win, they will increase taxes," with plans to raise the corporate tax rate from 21% to 28%. Mr. Boccaccio advises clients to review potential accounting changes to optimize tax liabilities, suggesting that deferring deductions could be beneficial if rates rise. He also notes the potential impact on non-U.S. activities, as Kamala Harris's plan could double the tax on non-U.S. revenue from 10.5% to 21%. Despite concerns about the future of the Inflation Reduction Act under a Trump presidency, Mr. Boccaccio believes the tax credit marketplace will remain viable, urging taxpayers to continue acquiring discounted federal tax credits.

 

Accounting Today

As states like Colorado, Utah, and Louisiana consider accepting cryptocurrency for tax payments, challenges persist. Colorado's two-year experiment has not yielded sufficient revenue to cover Bitcoin costs, highlighting the impracticality of current payment systems. The existing tax code treats crypto transactions as taxable events, leading to potential double taxation for users. Andrew Gordon, managing attorney at Gordon Law Group, advocates for a de minimis exemption similar to foreign currency transactions, which would simplify tax reporting for small crypto transactions. He argues that reform is essential to encourage crypto adoption for tax payments, stating, "Lawmakers should take actions that embrace, normalize, and simplify the use of digital payments." Streamlining the process could also benefit the IRS by closing the tax gap for compliant taxpayers.

 

Bloomberg Tax

Alimentation Couche-Tard's $47.2bn bid for Seven & i Holdings, owner of 7-Eleven, is likely to encounter significant challenges during the U.S. antitrust review. According to Jennifer Rie, an antitrust analyst at Bloomberg Industries, the "chances are very high” that the U.S. Federal Trade Commission (FTC) will find the concentration levels problematic due to the proximity of Circle K and 7-Eleven locations. The merger could necessitate divestitures of up to 2,463 stores, representing 12.31% of the combined outlets. Couche-Tard founder Alain Bouchard said: "We have an answer to that”, indicating the company is prepared to address potential antitrust concerns. The FTC has been vigilant in scrutinizing major mergers, particularly in the retail sector, which could complicate Couche-Tard's ambitions.

 

Japan Times

U.S. housing starts eased in September as a drop in multifamily projects outweighed a pickup in construction of single-family dwellings. The Commerce Department said housing starts fell by 0.5% to an annual rate of 1.354m in September after spiking by 7.8% to a revised rate of 1.361m in August. The increase was in line with the median projection in a Bloomberg survey of economists. Starts of single-family homes climbed 2.7% to an annualized 1.03m, while construction of multifamily homes slumped 9.4% to a four-month low. The number of overall building permits, a proxy for future construction, fell 2.9% to a 1.43m annualized rate. Starts of one-family homes rose in two of four regions, including a 6.6% increase in the South to a five-month high, and a 10.6% gain in the Northeast. “With affordability still a pressing issue in many regions, home building will likely remain stagnant until the Fed is well into its easing cycle and mortgage rates have fallen another one percentage point,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.

 

Bloomberg

RTT News

Walmart has reached a settlement where insurance carriers will pay the company $123m, excluding any attorneys' fees and expenses awarded to the plaintiffs' counsel. The settlement, which is subject to court approval, does not include any admission of liability by Walmart. This follows lawsuits filed by three Walmart shareholders in the Delaware Court of Chancery, alleging that current and former directors and officers failed to oversee the company's distribution of prescription opioids. In 2022, Walmart had already agreed to pay $3.1bn to settle lawsuits related to the impact of opioid prescriptions filled by its pharmacies.

 

The Columbian

Revvity, the former life-sciences and diagnostics business of the company previously known as PerkinElmer, is stepping up investments in software and research as it works to shape its new identity more than a year after its acquisition by New Mountain Capital for $2.45bn. “We are focused on turning this into the company we want it to be as Revvity,” said chief financial officer Max Krakowiak. “We have to shed the PerkinElmer legacy.” One key area of greater investment has aimed to strengthen and boost efficiencies in the company’s internal operations. Revvity in recent weeks launched a new e-commerce platform on which employees can sell products. The company also invested in some of its supply-chain facilities to optimize its freight and logistics and consolidate its footprint. Revvity expects its research and development costs as a percentage of revenue to increase, in part due to the skilled employees it gained through recent acquisitions. “We now have the opportunity to invest organically at a higher clip than we have historically,” Mr. Krakowiak added.

 

Wall Street Journal

The accounting profession is grappling with significant challenges in talent acquisition and retention. Despite increasing salaries and the integration of artificial intelligence to address staffing shortages, experts emphasize that a fundamental shift is necessary to attract the next generation. Current average starting salaries for accounting majors are around $65,000, which lags behind those in technology and finance. Paul Miller, a CPA and managing partner at Miller & Company, said: "The industry as a whole is not attractive to the younger population." Additionally, leaders are exploring how to effectively implement AI without displacing entry-level roles. Shagun Malhotra, chief executive of Skystem, suggested that enhancing accounting education to focus more on technology could make the field more appealing. Elizabeth Beastrom, president of Thomson Reuters Tax & Accounting, highlighted the issue of burnout due to excessive workloads, saying: "We've asked tax and accounting professionals to do too much with too few resources for too long."

 

Accounting Today

Nokia has cut 2,000 jobs, or about a fifth of its employee base, across Greater China and plans to cut another 350 jobs across Europe as part of efforts to lower costs, according to sources. The company laid out plans last year to cut up to 14,000 jobs to reduce costs and save between €800m ($868m) and €1.2bn by 2026. Sources said that the cuts are part of that plan.

 

Reuters

Mariia Eroshin, managing director of family office at Certuity, emphasizes that with the increased compensation of law firm partnerships comes greater financial complexity. In her article, she outlines key financial strategies for new partners to secure their wealth long-term. Eroshin advises partners to create comprehensive financial plans, from cash management for partnership buy-ins to developing a tax strategy based on K-1 forms and managing quarterly estimates. She also highlights the importance of estate planning, investment diversification, net worth tracking, risk mitigation, and legacy planning.

 

The American Lawyer

The National Retail Federation (NRF) forecasts a 2.5%-3.5% annual increase in retail sales during the holiday season, for a total of $979.5bn-$989bn. NRF chief economist Jack Kleinhenz commented: “We're optimistic about the pace of economic activity through the remainder of this year”, despite a slower growth rate than the previous year's 3.9%. Online shopping is projected to rise by 8%-9%, while consumers plan to spend an average of $1,778 this season, up 8% from 2023. The NRF also noted that the peak shopping period will be shorter this year, with only 26 days from Thanksgiving to Christmas Eve, potentially affecting logistics and shipping.

 

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