Initial takeaways from NACVA’s Virtual Super Conference

BVWireIssue #213-4
June 24, 2020

expert testimony
business valuation profession, conference, national association of certified valuation analysts (NACVA)

NACVA held the first major multiday multitrack conference of the year online all last week, and BVWire attended all week via the Zoom platform. We found excellent speakers, interesting sessions, and the technical details all went smoothly (attendees even received lunch credits via GrubHub).

Brien Jones, NACVA’s chief operations officer and executive vice president, welcomed the group and went through accomplishments over the past year, including new collaborations with other valuation professional organizations, enhanced virtual learning efforts, and the formation of a global advisory council. Significantly, the CVA credential achieved accreditation from the American National Standards Institute (ANSI), which is a “major milestone for the credential,” says Jonathan Jackson, NACVA’s executive director. The CVA credential is also accredited by the National Commission for Certifying Agencies (NCCA), a division of the Institute for Credentialing Excellence. Only four credentials in the world hold both the NCCA and ANSI accreditations, says Jackson.

Here are a few takeaways from some of the early sessions:

  • You can get into trouble with ethics if you face an issue that you may not be competent enough to handle, so you should bring in a third-party expert. But that brings up a curious question: How do you know you’re not competent? points out Rob Schlegel (Houlihan Valuation Advisors). Interesting!
  • When courts reopen to jury trials in the wake of the pandemic, juries will be more anxious than ever because of lingering worries about the virus, says Judge Timothy Driscoll of the New York State Supreme Court—Commercial Division. Courts aren’t sure what to do about this yet, but testifying experts need to recognize it.
  • Just because you see something fishy in the financials doesn’t automatically mean it’s fraud—most of the time it’s just an error, says Robert Minniti (Minniti CPA LLC). He advises that you talk with management and the accountants about it. If it ends up that the matter is likely to be fraud, consider withdrawing from the engagement.
  • Cannabis is now deemed an “essential” service in most jurisdictions that have legalized medical or recreational access, and a number of states have relaxed restrictions on access due to COVID-19, such as allowing home delivery (unheard of a short time ago), say Ron Seigneur and Ryan Cram (Seigneur Gustafson LLP), who have a paper out on cannabis and hemp valuations.
  • “Partnership is the new leadership,” says keynote speaker Ty Bennett (Leadership Inc. Institute). No longer does title or position guarantee that you will be accepted as a leader. One example: 20,000 company workers walked off the job when the snooty majority owner tried to buy out the co-owner, who was down-to-earth and loved by workers.
  • Be aware of changing capital structure when doing a cost of capital analysis, says Roger Grabowski (Duff & Phelps). Especially during the pandemic, some companies may have added debt to raise cash, but those debt levels will not continue long term.
  • A wave of business interruption cases is expected in the face of the hard line insurers have taken to deny coverage for virus-related claims, so attorneys will need calculations for that, according to Allyn Needham (Shipp Needham Economic Analysis LLC). Attorneys are advising clients to file claims even though coverage may be iffy, reports Rebekah Smith (GBQ Consulting).
  • A poll of attendees revealed that 75% do not include anything about cybersecurity risk in their valuation reports. That’s a problem, say Dave Miles (ValuSource) and cybersecurity expert Ray Hutchins, a managing partner at CyberCecurity LLC, because cybersecurity is a definite risk that each and every business faces. Yes, there’s cyber insurance, but it will not cover everything, such as damage to a company’s reputation.

We’ll have more in the next BVWire, and more extensive coverage will be in the August 2020 issue of Business Valuation Update.

Extra: For additional information on cybersecurity, see “BVR Briefing—“Cybersecurity in Business Valuation: Addressing the Impact of Data Breaches on Value,” in which an appraiser and cybersecurity expert give some practical ways to measure the impact of data security and cyber liability risks on the value of a business.

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