Normalization adjustments to cash flows continue to be one of the more common—but still controversial—aspects of valuing a private company under the income approach. For instance:

• Do you routinely adjust for nonrecurring expenditures?
  
  
• Do you use a normalized capital structure when calculating the cost of capital?
  
  
• Do you make compensation adjustments in valuing a controlling interest?
  
  
• Do you consider an adjustment to owner’s comp as a “normalization” or a “control” adjustment?
  
  
• How do you distinguish between normalization adjustments for a control value versus those for a minority value?
  
  
• What is the most common mistake you observe appraisers making in the area of normalization adjustments?
  
  
• What is the strangest normalization adjustment you ever made?
  
  
• Have you ever had a court disallow an adjustment?

Our latest online survey will answer these and many more questions. The results will provide appraisal professionals with insights into their own practices as well as the general practices of the BV community. To participate, click here now.

Our thanks to Brandi Ruffalo (Valuation & Forensic Partners) and Garth Tebay (Value Defined) for constructing the comprehensive survey. Look for highlights in next week’s ’Wire. On December 6, be sure to join Ruffalo and Tebay with for their Advanced Workshop on Normalization Adjustments. During this intense, four-hour, interactive workshop, the presenters will analyze and discuss the complete survey results and provide the most current and credible methods for making these critical adjustments. Note: 4.5 CPE credits are available for workshop attendees.