Harold Martin (Keiter) has the following additional comments regarding the appraisal discussed in last week’s BVWire article dealing with a valuation date of Dec. 31, 2019, and whether the impact of the coronavirus should be considered a subsequent event:

As I noted in the article, for valuations with an effective valuation date as of 12/31/19, I would agree with the position taken by the appraiser that the economic impact of the coronavirus should be considered a subsequent event and therefore, the event would have no impact on the valuation. The appraiser’s report should also include a discussion noting the subsequent event. However, there is an additional issue in this instance given the purpose of the valuation that requires that I clarify my initial comments. The appraiser noted that the purpose of the valuation was for an ESOP transaction. Further, the appraiser noted that the transaction had not yet closed as of the report date of March 11, 2020. As I noted in my comments in the prior article, the guidance from the U.S. Department of Labor’s Proposed Regulation relating to the Definition of Adequate Consideration requires that the “fair market value must be determined as of the date of the transaction involving that asset.” Given this guidance, the appraiser should consider preparing a valuation report with an effective valuation date as of the date of the transaction, or alternatively, prepare a bridge letter updating the previous value as of December 31, 2019, to the value as of the transaction date. Under either alternative, the more current valuation date would require consideration of the impact of the coronavirus pandemic as it would no longer be considered a subsequent event.