In his session last week at the AICPA National BV Conference "Look Before You LEAPS: Using Collars and LEAPS to Determine DLOMs," Kevin Yeanoplos (Brueggeman and Johnson Yeanoplos) shared key tips for practitioners using Long-Term Equity Anticipation Securities (LEAPS) in their DLOM calculations. First, there are 770 companies with associated LEAPS available as comparables– the entire list can be found and downloaded at the Options Industry Council web site.
Yeanoplos pointed out "if you can't use the Guideline Public Company Method, then you probably can't use LEAPS." Talking to BVWire after the session, he expounded on the importance of adding LEAPS to the DLOM toolbox. "Everybody should be familiar with all the tools because the tax courts are encouraging us to find more definitive ways of quantifying our conclusions and to look at more market-derived data. And with the growing importance of fair value, the reality is that the quantitative models are easier to audit." Yeanoplos also reminded the audience about the importance of using more than one model or study when calculating the DLOM.
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