Can BV practitioners safely use the historical earnings of a business as an indicator of its future performance, given the current recession and aberrant market/credit data? Fledgling companies without any consistent history of returns will surely pose difficult problems in using management projections, according to Judge Jacqueline Silbermann, who spoke with Sharyn Maggio and Bill Morrison on Projections, Post-Judgment Events, and the Post-Bernie Madoff World at the 2nd Annual Summit on BV in Divorce in Chicago last month, co-sponsored by BVR, NACVA, and the ASA.
“We’ve hit the reset button,” said Morrison. “What we need to be is very practical. We have the valuation and financial tools—we’ll still use past earnings, but even Rev. Ruling 59-60 says you just don’t average them. I think the precaution is that we’re not too pessimistic.” The session covered much more, including the pros and cons of agreeing to revisit a valuation and/or income determination in the future; using a later date to value a spouse’s business to achieve “equity,” and how to distinguish between short- and long-term economic effects.
Where can you hear more? On Friday October 16th we’re rebroadcasting this session along with Current Developments in Standards of Value—Thornhill and Other War Stories, featuring Ron Seigneur, and Active vs. Passive, with Chris Mercer, Ashok Abbott, and Mark Sobel. Attendees will also receive complete presentation materials from the recast sessions. To find out more about this 2-CPE event and to register, click here.
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