Expanding on his recent comments at the ASA Tax Court Cases Symposium in Cerritos, Calif. (as reported in BVWire #116-4), Dennis Webb of Primus Valuations wants business appraisers to focus less on the “minutiae of valuation cases,” as interesting as those may be. “The problem is that we do not usually see our work from the user’s point of view,” he says, and very often end up with “frighteningly complex reports that are impossible to understand” by either the clients or the courts. Worse, if the IRS can’t figure it out, “they throw it out,” Webb says. If a Tax Court judge can’t follow an expert’s analysis, he or she will often disregard it and conduct his own.
                           
Poor technical work can be blamed, but it isn’t the only problem, Webb says. “The appraisal report often takes on an otherworldly quality,” in which “common sense gets lost."  To remedy the problem, he advises appraisers to use these “three keys” to valuation success: 1) find the facts; 2) connect the dots; and 3) tell the story. “The appraisal profession examines valuation processes endlessly, advancing and testing different methods and types of data,” Webb says. “Let’s start putting the same emphasis on finding all the material facts, making sure the facts connect with the analytical methodology and market data, and foremost, tell the story in a clear and persuasive way.” Look for more on how to apply Webb’s three keys in your next report in a future Business Valuation Update.