Here are more takeaways from the annual valuation conference held by the Southeast Chapter of Business Appraisers in Atlanta. The event was co-sponsored by IACVA, and BVR was the sponsor for the CPE. More information on the conference was reported in last week’s BVWire.
Key issues: On Saturday morning, Bob Morrison discussed international valuation issues, focusing on how to factor volatility into country-specific risk and how to incorporate these risks into the cost of capital. He also covered what the international market is looking for from valuation professionals. Sherry Smith used case studies to illustrate the various types of normalization entries to financial statements. She discussed when different types of entries are appropriate and how the courts have ruled. Barry Baker addressed the issues that arise with off-balance sheet items, both assets and the equally sinister liabilities. Specifically, he discussed the valuation of contingent assets and liabilities in both litigation situations and for milestone payments.
In the afternoon, Seth Webber discussed how to deal with several of the most common accounting problems business valuators encounter, illustrating the issues with both a case study and DuPont analysis. Through the case study, he demonstrated different accounting methods used to manipulate financial statements. And to round it out, Jim Lurie covered the topic of the much-misused growth rate. Information collected in the client interview, including a discussion of strengths, weaknesses, opportunities, and threats, should be integrated into the valuator’s process. He discussed how the economy and industry are relevant to the process of assessing a growth rate and the importance of reasoned logic in reaching a relevant conclusion.
Congratulations to SECBA for a fine conference.
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