Four years in the making, the revised AICPA guide, Valuation of Privately-Held Company Securities Issued as Compensation, has been released. It’s available now in e-book format, and the print version will be available in July.
New chapters in the revised guide discuss a framework for evaluating private and secondary market transactions; adjustments for control and marketability; implications of highly leveraged entities (i.e., how companies should incorporate the fair value of debt in the valuation of equity securities); and a new discussion on the relevance of ASC 820 (SFAS 157) to cheap stock issues. The final guide also discusses the latest thinking on discounts for lack of marketability.
“This practice aid serves to codify the accumulated best practices that have evolved in the eight years since the original practice aid was issued, in part confirming much of what is already being applied in current valuations,” says Rob Barnett, managing director of Valuation Research Corp. (VRC).
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