Takeaways from the NYSSCPA valuation conference

BVWireIssue #260-4
May 22, 2024

valuation profession news
damages, goodwill, intellectual property, business valuation profession, fund valuations, NYSSCPA, estate & gift, internal revenue service (IRS)

BVWire attended last week’s annual New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and—as usual—it was an excellent event. This was a full-day conference, and here are some main points from the morning sessions—we’ll have takeaways from the afternoon sessions in the next issue:

  • A visual such as a graph can go a long way toward explaining a complex valuation to a judge—and consider showing the visual first, before you start explaining things;
  • For funds with complex capital structures, ask about the original intent of the structure at the outset to get a better understanding of the setup;
  • A fund management company may have goodwill, but the trick is calculating it;
  • The value of stock options for divorce purposes may be split into three equal components: for past, current, and future work;
  • Investors are paying what many say are too-high prices for music industry assets—in the 8%-to-11% range in terms of expected returns;
  • Unpublished music by famous artists who have passed away is generally not that valuable because it’s usually of lesser quality—otherwise it would have been released while the artist was still alive;
  • The IRS is on a hiring binge (including adding many business valuation experts), but much time will be spent on their training, so audit quality will suffer in the meantime;
  • One-third of valuations done for the IRS contain math errors;
  • Marketability discounts, reasonable comp, and S corps are still the main valuation issues on the IRS’ radar; and
  • Litigation finance is providing the funds to bring more IP-related cases to trial that would otherwise be too expensive to pursue, triggering the need for more valuations and damage estimates, especially for patents.

We’ll have more takeaways from other sessions in the next issue. A detailed recap will be in the July issue of Business Valuation Update.

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