More takeaways from the ASA-CICBV conference

BVWireIssue #146-2
November 12, 2014

Last week’s BVWire included some interesting pieces of information we collected during the ASA-CICBV Business Valuation Conference in Toronto. Here are a few more:

Courts are steering valuation experts toward quantitative methods and away from qualitative analysis, observes David Margules (Ballard Spahr), an attorney in Delaware. Judges are leery of experts using too much judgment and veering into an advocacy role.

Prof. Lawrence Hamermesh (Widener Univ. School of Law) says that plaintiffs in Delaware are doing well at getting awards due to the value of deals being higher than the deal prices. He says don’t ignore market evidence in valuation disputes. In the Huff Fund case, the Chancery rejected the valuation expert’s analysis in favor of an actual merger price involving the subject entity—this is something that the courts just can’t ignore.

William F. Pittock (Ernst & Young LLP) says that since the 1987 crash, the 2008 housing collapse is the only stock market correction that materially impacted control premiums. 

“Interesting premiums” are being seen in tech company acquisitions due “acqui-hiring,” observes Dan Knappenberger (Deloitte). Buyers are paying high prices to get good tech people at the target firms. But these high premiums are not being seen in Canada, says Duncan Stewart of Deloitte in Toronto. The speakers also say that the days of large IP and patent portfolios being the be-all and end-all of tech companies are over. Now, getting revenues and customers to help value trademarks is more important than IP.

Speaking of IP, during the cocktail reception we heard about a new database available to help value trademarks. The database, Markables, contains over 5,000 trademark valuations published in financial reporting documents of listed companies from all over the world. Supposedly, the database reports value solely for the use of trademarks (not bundled with other rights). It also contains trademark assets that have longer lives than is typical. 

John Borrowman (Borrowman Baker LLC), a recruiter who works exclusively in the BV profession, tells us firms have a high demand for BV people in the two- to five-year experience range. Reason: Their experience relative to their low cost makes them very productive employees. Trouble is, they’re in short supply and hard to find.

Aswath Damodaran (NYU Stern School of Business) says that confusion over the concepts of "value” vs. “price” leads valuators to use the wrong toolkit 80% of the time. His next book will be devoted to this topic.

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