BVWire attended the annual business valuation conference of the New York State Society of CPAs (NYSSCPA) in New York City. In our last issue, we gave you a few takeaways—here are a few more. We’ll have full coverage in the July issue of Business Valuation Update.
Is BV a profession? This was the title of the presentation by Mark Zyla (Acuitas Inc.), who focused on the recent developments in fair value measurements. Unlike accountants and lawyers, Zyla pointed out that valuation professionals do not have common education requirements, a single identification in the marketplace, a single set of standards, nor a disciplinary mechanism. The new efforts around the CEIV credential for fair value is a step in the right direction, and comments from the SEC, a critic in the past, are positive so far.
DLOM deluge. There are close to 75 methods for estimating a discount for lack of marketability “with more arriving on a regular basis,” said R. James Alerding (Alerding Consulting LLC) and Pasquale Rafanelli (Grassi & Co.) during their session. One new method they mentioned was an expansion of the Mandelbaum analysis they call “Mandelbaum on steroids”—it inflates the framework from the original nine factors to 40. But this may open the expert up to more points of attack.
Estate tax limbo: Amid uncertainty over estate tax reform, attorney Ladidas Lumpkins and valuation and forensics expert Alfred Pruskowski (Prager Metis CPAs LLC) advised the audience to “stick to the status quo” for the foreseeable future in terms of issues such as estate tax freezes and intentionally defective grantor trusts (IDGTs) and to consider spousal limited access trusts (SLATs) and dynasty trusts (to preserve tax-free status forever). Also, take full advantage of existing discounts while the proposed Section 2704 regs are in flux.
New York LLC law reform. One of the “more obvious shortcomings” in New York’s LLC law is the absence of a fair value buyout provision in judicial dissolution cases, such as the one found in New York’s Business Corporation Law. CPA and valuation expert Edward F. Esposito and attorneys Peter A. Mahler (Farrell Fritz PC) and Bruce Rich (Carter Ledyard and Milburn LLC) said that most states have upgraded their LLC statutes—but not New York. They also urge the state to resolve the growing debate and lack of clarity over DLOM in fair value proceedings. By the way, Mahler has a great series of podcasts on business divorce in New York, including one with Chris Mercer (Mercer Capital), who was one of the experts in the AriZona case.