Fair value for financial reporting and tax affecting now share top billing for the “most important BV topic of 2007,” according to our annual BVWire™ survey. Compare that to last year’s poll, in which only 6% of respondents believed that fair value for financial reporting was the most important issue, while 40% thought that tax affecting was the hottest topic of 2006. This year, IRS issues declined from 35% of the vote in 2006 to 14.6% in 2007, perhaps ceding ground to the newcomer: 14.6% of respondents saw BV Standards as the most important issue of the year. Survey comments show that this topic continues to elicit the most passion among practitioners. “We need a unified DOMESTIC set of valuation standards,” says one, with emphasis:
To turn the problem over to the IVSC without a domestic benchmark is like turning over the creation of GAAP to the IASB without GAAP in place in the U.S. The governing body… farthest away from that which it governs is the most bureaucratic, the least responsive, the most corrupt, and the most expensive. Exhibit A: Congress. Exhibit B: the U.N.
“I don't consider myself an accountant,” says another. “I'm a financial analyst who values private companies for a variety of purposes. If the BV appraisal profession is going to survive as a relevant and independent group, our BV professional associations need to work together and take on the leadership role in all valuation issues.” Currently, that leadership lies with the FASB and the AICPA, this commentator says. “SFAS 157 and [SSVS-1] are both shots across our bow that have yet to be answered.”
Don’t forget small business concerns. Two-fifths of this year’s respondents are focused on the “bread and butter” issues of business valuation. “I deal only with small businesses,” says one, “and the S Corp tax affecting issue has the biggest impact on my practice.” “I deal with VERY small companies,” says another. “I am not convinced that status has any significant impact on value.” Along these lines, 12.2% of respondents believed that discounts, premiums, cap rates and other analytical issues continue to be important BV topics, while 4.9% referred to “other” topics—including one who voted for “all of the above!”
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