Top BV stars provide insights, inspiration—and a few laughs

BVWireIssue #165-4
June 29, 2016

BVR has had the honor of having the valuation profession’s brightest thought leaders grace the airwaves of our webinars over the years. To mark the occasion of having presented 500 webinars, BVR is turning over the microphone to 15 of these distinguished individuals who will offer what they feel is the most helpful advice they can give to the profession. Here are just a few samples:

“If you ask me to describe valuation, the way I describe it is it’s a craft,” says Aswath Damadoran (New York University Stern School of Business), who will talk about storytelling and valuation. “The essence of a craft is that you learn it by doing it. Cooking is a craft. You learn cooking by actually cooking. Not by reading cookbooks or watching cooking shows. Valuation you learn by doing.”

“There is a Chinese proverb that says, ‘The best time to plant a tree is 20 years ago,’” says Chris Mercer (Mercer Capital), reflecting on the growing valuation professional. “The next best time is now. The growing professional is always tilling the proverbial soil and planting the proverbial seed.”

“Traditionally in our profession most people use what I refer to as average discounts from restricted stocks or IPO studies,” points out Bruce Johnson (Munroe, Park & Johnson), who’ll present on DLOM. “I caution people to not use a fixed or an average discount. Putting a 35% discount on an appraisal report usual leads to scrutiny and it’s very hard to justify that unless there is some objective data behind it.”

“In a survey, two-thirds of respondents say that CapEx (capital expenditures) and depreciation were the same or very similar,” points out Gil Matthews (Sutter Securities). “That assumption is wrong. CapEx must be greater in a growth model.”

“We get calls from our clients contemplating a secondary transaction and asking how is that going to impact their 409a value,” notes Neil Beaton (Alvarez & Marsal), speaking on current trends in 409a valuations. “What I tell them is basically two things: magnitude and frequency. How big is the deal? How often does it occur? And each of those will have an impact on what will transpire and move forward.”

“One of my favorite worst practices is people who use complexity to show off their math or Excel prowess,” says Anthony Banks (Marcum), talking about common mistakes in advanced financial modeling. “One example is called a two-loop hexagon Wilson loop. The formula runs for 22 pages, and the author of this formula was able in subsequent papers to reduce this massive equation down to a single line.”

Four-hour special: You’ll hear many more insights from many more speakers during the Valuation Jubilee: Celebrating BVR's 500th Event. Tune in tomorrow, June 30, from 1 p.m. to 5 p.m. ET.

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