During the recent BVR Power Panel webinar, a question came in from the audience: What are your thoughts about using the 2022 Partnership Profiles data until the company produces a more up-to-date report? A bit of background here: As of Jan. 1, 2024, Partnership Profiles determined that there was an insufficient number of publicly registered partnerships and unlisted REITs with new data to update the Partnership Profiles Minority Interest Discount Database or create meaningful Partnership Real Estate Guideline Reports.
What to do: The 2022 data are fine to use for 2022 valuations, but the panel was skeptical about extrapolating that data forward without knowing how those discounts may have been affected in a different environment. Appraisers should consider using five-year averages of the discounts—just as you do in other instances, such as using historical data from studies of restricted stock, IPOs, mergers and acquisitions, and the like. Also, appraisers should consider the income approach to capture a minority stakeholder’s interest, if such an approach is possible.
In the April issue of Business Valuation Update, Bruce Johnson (Munroe, Park & Johnson Inc.) explains alternative analyses and what’s going on with the Partnership Profiles data, including the development of some new reports that cover a five-year time frame. Johnson is co-author, along with James Park and Spencer Jefferies, of the Comprehensive Guide for the Valuation of Family Limited Partnerships and LLCs. Plus, Park and Jeffries will be conducting a webinar for BVR that will give more details about this matter. Stay tuned for an announcement of when that webinar will take place.
The BVR Power Panel members were Ken Pia (Marcum), who also acted as moderator; Jeff Tarbell (Houlihan Lokey); Neil Beaton (Alvarez & Marsal); and Michelle Gallagher (Adamy Valuation). Next quarter, the BVR Power Panel will be back with more thought-provoking discussions. A recording of the last webinar is available if you click here (free for holders of the BVR Training Passport Pro).