During the last six years, a variety of S corporation models have been developed and promoted that endeavor to correct the conceptual flaws of the “traditional” application of the discounted cash flow method. One of the most recent entries is a model developed by Nancy J. Fannon (the “Fannon Model”) and published in 2007 by Business Valuation Resources in a binder titled Fannon's Guide to the Valuation of Subchapter S Corporations. This article examines and discusses the foundational elements of the Fannon Model and provides conclusions as to whether these elements are consistent with generally accepted business valuation concepts and theory.
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