The first in a series of “power panel” BVR webinars drew a huge audience and brought together top thought leaders in the profession to address hot-button issues via questions from the audience (some on video). The panel, moderated by Jay E. Fishman (Financial Research Associates), consisted of Michelle F. Gallagher (Adamy Valuation), Ken Pia (Marcum), and Jeffrey S. Tarbell (Houlihan Lokey). They fielded questions about valuations amid COVID-19, PPP loans, tax affecting pass-through entities, ESOP valuations, and future leadership of the profession. They also discussed the recently proposed revision to the International Glossary of Business Valuation Terms that is currently out for public comment (due January 31).
Some concerns: Gallagher noted that some new terms and methodologies in the glossary could create a problem—especially in a litigation context—if the glossary is made part of the valuation standards. Some of the new glossary entries include methodologies that are unknown to some practitioners. Pia commented that opposing counsel could pick up on this and ask the practitioner whether he or she used the methodologies listed in the new glossary. If you answer “no,” the next question you’ll get is “Why not? It’s in your professional standards.” Enough of those questions and enough “no” answers could seriously impact the expert’s credibility in the eyes of the court.
Tarbell, who is in the working group for the glossary, acknowledged this concern and noted that the working group will consider it. He pointed out that the glossary has a number of disclaimers in it and is not meant to be authoritative, but one possibility is to issue it in a form that clarifies this. Fishman also suggested that the definitions be put into context. For example, if a term is used primarily for financial reporting purposes, the glossary should explain that, or, if a term is used primarily in a particular country, the glossary should point that out as well.
The panel urged the audience to review the terms and definitions in the proposed glossary and submit comments by the deadline. You can find more details including how to submit comments in our prior coverage.
A recording of the webinar is available if you click here. The next “power panel” is scheduled for April 6.
Extra: A redlined version of the BV glossary is included in the online version of the February 2021 issue of Business Valuation Update (subscription required).