Are BV appraisers tax affecting anymore?

BVWireIssue #115-4
April 25, 2012

What was recently one of the most controversial topics in business valuations—the tax affecting of subchapter S corps—seems to have given way under the pressure of the economic downturn as well as the rise of other “hot” BV topics, such as the derivation of the size, liquidity, and/or marketability discount as well as the implied-versus-historical equity risk premium. Recently, a subscriber wrote us to ask, “Does anyone tax affect anymore? If so, what model do analysts use?” That led us to wonder, if they don’t tax affect at the end of the analysis, do they take account of taxes in a DCF analysis by “tweaking” the discount rate? What impact, if any, has the recent research by Fannon and Sellers had on how BV appraisers consider the tax-affecting issue now?

Good questions! We’ve put together a brief, four-question online survey on the current state of tax-affecting among BV professionals. It’ll only take a few minutes to complete, and we’ll publish the results next week. To participate, click here.

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