Tax, family law matters are still the top revenue generators

BVWireIssue #107-1
August 3, 2011
Tax and family law matters continue to contribute significant revenues to practitioners and their firms, according to the new 2011/2012 BV Firm Economics & Best Practices Guide (see table below). In fact, during the past two years, valuations for tax purposes have surpassed divorce valuations as the top source of revenues for BV firms, perhaps due to the reported “boom” in business transfers as Baby Boomers begin to exit their enterprises and plan their estates.

Percent of total business valuation revenue comes from the following
specialty areas (average for firms reporting any revenue in each specialty):

Practice Specialty

2010

2008

Tax, Gifts and Estates

36.1%

32.10%

Family/Matrimonial

29.4%

34.60%

Transactional (Including brokerage, mergers and acquisitions)

23.7%

23.20%

Fair Value for Financial Reporting (ASC 820, ASC 805 purchase price allocations, etc.)

17.6%

18.60%

Shareholder/Corporate (buy/sell agreements, shareholder disputes, etc.)

16.6%

17.70%

Incentive compensation arrangements

11.8%

6.60%

ESOP

10.7%

14.40%

Bankruptcy and Restructuring

5.0%

6.70%

Transfer Pricing

4.8%

3.00%

Other revenue sources not listed above

14.3%

19.00%

Will tax matters stay on top, following BV-related litigation trends? Members of LinkedIn’s Business Valuation & Advisory Network recently responded to Gary Schurman’s (Applied Business Economics) query regarding the current (and future) hot beds of BV-related litigation. Some answers:

  • Discounts for lack of marketability (DLOMs)
  • Effect on value of pass-through entity tax status
  • Prices paid for pass-through entities
  • Control premiums
  • Earnouts  
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