The beach or the ski slope? Those were the options for attendees who ventured out to either Park City, Utah, or Fort Lauderdale, Fla., for the NACVA Business Valuation & Financial Litigation Super Conference last week. About 300 attendees learned the following (along with a lot more):
- Understanding the psychology of fraud could help assess the risks of fraud in the subject company you’re valuing (check out the book ABCs of Behavioral Forensics);
- U.S. household inflation rate expectations three years out stand at about 3%; any downturn in the economy will likely be mild followed by a subdued expansionary phase;
- Financial metrics could look strong, but, if the subject firm has culture issues and the employees are not happy, there’s a good chance the metrics will eventually deteriorate;
- Ongoing research on growth shows that different industries have different growth rates, and the expected long-term growth rate should reflect “organic” growth (without the effect of acquisitions);
- A frequent ethics complaint involves lack of professionalism tied to litigation, such as making a personal attack on an opposing expert (you should attack their opinion, not them personally);
- Practitioners continue to struggle with digital assets and how to assess related income streams;
- To date, there is no empirical evidence that establishes a link between ESG ratings and returns—but look for some studies to emerge in 2023;
- A sanity check model for M&A valuations continues to evolve—it’s now in Version 7—but it has a steep learning curve (Excel templates were handed out);
- A judge says a “great” valuation report is one where you can follow the logic by just looking at the narrative or by just looking at the visuals (charts and graphs);
- Check out the Mackay 66 Customer Profile to “own” your clients and differentiate you and your firm from your competitors (it’s an oldie but still very relevant);
- AI will start to find its way into BV; for example, work is underway to integrate AI into selecting market comps; and
- A panel of young BV practitioners say they need more client interaction to gain more experience and credibility.
A more detailed recap as well as some in-depth coverage on certain topics will be in future issues of Business Valuation Update.
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