BVWire has been getting a sneak peek at some of the revised chapters in the new, sixth edition of Understanding Business Valuation by Gary Trugman (Trugman Valuation). The book is known for its real-world examples and practical advice based on the author’s many years of experience. One way he does this is through the many “Author’s Notes” that are spread liberally throughout the book. For example, in the chapter on valuation standards, he includes most of the AICPA standard (SSVS 1) and adds his annotations, such as:

Jurisdictional Exception

.10 If any part of this statement differs from published governmental, judicial, or accounting authority, or such authority specifies valuation development procedures or valuation reporting procedures, then the valuation analyst should follow the applicable published authority or stated procedures with respect to that part applicable to the valuation in which the member is engaged. The other parts of this statement continue in full force and effect (Interpretation No. 1 [VS sec. 9100 par. .01-.89]).

AUTHOR’S NOTE: What does this really mean? If someone else makes the rules, and you are playing in their backyard, you have to follow their rules. For example, if you are engaged to value a business for a divorce in a state that excludes personal goodwill from equitable distribution, you cannot hide behind this standard to avoid carving out the personal goodwill piece of the pie. So, if you represent the nonbusiness owner-spouse, don’t think that you can get away with ignoring personal goodwill to pump up the value. Besides the fact that this is unethical (because advocacy for a client should never be done as an expert witness), the law of the land supersedes this standard. However, all other provisions of this standard will still apply.

Trugman’s book will be available in early 2022, and you can preorder if you click here. Note: If you are a subscriber to BVResearch Pro or BVR’s Digital Library, the book will be included with your subscription, so there is no need for you to preorder.