The U.S. economy is back; well kind-of. While we’re not talking about the expansion witnessed through 1998-1999, the U.S. economy is gaining momentum after a prolonged slow recovery from the 2007 economic recession. This economic growth has triggered an increase in both merger and acquisition (M&A) activity and litigation. With companies paying premiums for synergies, the treatment of these synergies in valuations in the litigation context has raised interesting questions. This article summarizes the current state of the U.S. economy and discusses its impact on M&A and litigation activity, as well as provides insight into the treatment of deal-related synergies in the fair market value and/or fair value setting.

The economic growth in the United States can be seen through increases in the gross domestic product in 2014 and into 2015. According to the Livingston Survey, real GDP grew at an approximate 3.1 percent rate in the second half of 2014 and was projected to grow at a 2.9 percent rate in the first half of 2015 and 2.7 percent in the second half of 2015. Additionally, the Livingston Survey provided that real GDP grew by 2.3 percent in 2013 and was projected to grow by 3.0 percent in 2014 and 2.8 percent in 2016. This is a significantly more positive outlook than the earlier post-recession years of 2010 and 2011.

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