BVWire is just back from Las Vegas and the annual Advanced Business Valuation conference of the American Society of Appraisers (ASA). Linda Trugman (Trugman Valuation Inc.), the international president of the ASA, welcomed the 750 attendees to the event, which was actually two conferences—one for business valuators and the other for appraisers of real estate, gems, art, and antiques. Total attendance was up from two years ago (the last time these appraiser groups got together). Of the total attendees, about 425 were business valuation experts, which is 20% more than last time.
“This is not your father’s ASA,” Bill Johnston (Empire Valuation Consultants), chair of the BV committee, said in his update on what’s going on at the organization. He was referring to current modernization efforts. For example, the ASA is updating many education courses and will have all of its BV certification training online next year. It also has a new technical committee that will put out several papers on technical issues by the end of the year. These are not large papers such as those put out by The Appraisal Foundation or AICPA but smaller ones on niche topics that may be considered controversial. The ASA also has some free webinar forums coming up for members in an ask-the-experts format, the next one being on S corps. Johnston also mentioned the new credential that’s in the works for fair value measurement for public companies in the U.S. The ASA, along with AICPA, RICS, and other stakeholders, are part of the effort by the valuation profession to work together to develop a common set of standards and practices with respect to these new credentials.
Here are some takeaways from some of the early sessions:
- Keynote speaker G. Scott Clemons (Brown Brothers Harriman) pointed out that current U.S. monetary policy and low interest rates are coming to an end as the Fed mulls a move back to more normal monetary policy;
- The lack of a clear explanation in a valuation report is a big red flag for IRS agents looking to pull estate and gift tax returns for audit, says Theresa Melchiorre, who is with the IRS Office of the Associate Chief Counsel;
- If you have questionable management forecasts for an ESOP valuation, ask the trustee to get a quality of earnings report, advises attorney Ted Becker (Drinker Biddle & Reath LLP);
- Using decision tree modeling instead of traditional probability weighting results in a 20% higher calculation of IP damages, according to a case study presented by John Taylor and Yuka Itami, both with Houlihan Lokey;
- When valuing complex equity and hybrid instruments, do it in the context of the sale of the security—not the sale of the company, says Amanda Miller (Ernst & Young); and
- To justify the amount of entrepreneurial profit used in a cost approach for intellectual property, the company’s gross profit margin is typically used, says Mark Zyla (Acuitas).
Next week’s BVWire will continue with more takeaways from this excellent conference. Gary Trugman (Trugman Valuation Inc.) will chair next year’s conference in Boca Raton, Fla.
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