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Wholesale Trade: Sales and Inventories

In the May issue of the Economic Outlook Update (EOU), the publication added data highlighting the wholesale trade segment of the U.S. economy, putting a spotlight on the data the U.S. Census published. The report highlights the sales totals of merchant wholesalers for April 2021, which included adjustments for seasonal variations and trading day differences. The report showed an improvement in wholesale trade in April 2021 when compared to March 2021 and from one year ago. In April, total sales were $570.8 billion, or 0.8% higher than the revised March level and 43.6% higher than the level from one year ago. Read more >>

In Jackson case, Tax Court dismisses IRS expert’s revenue projections as ‘simply not reasonable’

When Michael Jackson died, his image and likeness was besmirched and yet, once competent executors took charge, they were able to make a lot of money for the estate in the immediate post-death years. The issue was to what extent this subsequent development could factor into the image-and-likeness valuation. In explaining his high valuation, the IRS’ expert offered a theory of “foreseeable opportunities” that the U.S. Tax Court found unpersuasive. Read more >>

A Practical, Step-by-Step Process for Applying Invested Capital Premiums

For years, the valuation profession has debated the definition of a control premium, including its distinction from an acquisition premium. What began years ago as a relatively simple question—if there is a control premium, what should it be?—now includes analyzing such concepts as invested capital premiums and equity-based premiums, transaction synergies and strategic values, marketability, and levels of control. All are “key points” to keep in mind throughout the quantification of a control premium, say Tim Meinhart and Nate Novak (both of Willamette Management Associates), who led a webinar on this topic titled Evaluating and Applying Control Premiums earlier this year. Read more >>

Caesars Entertainment sues over COVID-19-related economic damages

On March 19, Caesars Entertainment joined the long list of businesses that have filed lawsuits against their insurance companies for refusing to pay business interruption losses stemming from COVID-19-related government shutdowns of economies across the nation and world. Whether Caesars, which asserts that losses its various business entities incurred may exceed $2 billion, succeeds where a lot of other plaintiffs have failed will be worth monitoring. Read more >>

Five Timely Insights From the NYSSCPA Business Valuation and Litigation Services Conference

The conference season is well underway, and Business Valuation Update has been on the virtual road, collecting the latest insights on a wide variety of topics. Here are some interesting takeaways from the New York State Society of CPAs (NYSSCPA) Business Valuation and Litigation Services Conference, held May 17. Topics included emerging issues (SPACs, cryptocurrency, Zoom as a practice-builder) and some new perspectives on evergreen topics (estate valuations, cannabis, distressed firms, and collaborations). Read more >>

Business Valuation’s ‘Dirty Little Secret’

Recent developments have put the spotlight squarely on projected financial information (PFI). The perception is that too many valuation experts simply accept projections and forecasts they’re given without applying enough scrutiny—or any scrutiny at all. Fortunately, there is some new guidance on how to examine and substantiate PFI you get from management or other third parties in BVR’s new Guide to Management Projections and Business Valuation: Analysis and Case Law. The following is an excerpt from that chapter. Read more >>

Tax Court resists tax affecting in Michael Jackson case

Although the U.S. Tax Court recently handed the Michael Jackson estate a decisive victory regarding the estate’s tax liability, the court did not side with the estate on tax affecting, an issue that has preoccupied valuators, many of whom are proponents of the practice, for a long time. Read more >>

How Did the Pandemic Impact EBITDA Multiples in 2020? Explore a 12-Month Snapshot in the DealStats Value Index

With the COVID-19 pandemic putting a stranglehold on the U.S. economy for most of 2020 and causing an unprecedented economic impact on small businesses, DealStats Value Index (DVI) captured the 12-month snapshot on how earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples have trended. Read more >>

Tax Court issues highly anticipated ruling in Michael Jackson case

In the long-running litigation between the estate of the late megastar Michael Jackson and the Internal Revenue Service, the U.S. Tax Court recently issued its opinion on the value of Jackson’s image and likeness, as well as the value of his interest in two music publishing assets. Overall, this much-anticipated decision is a major win for the Jackson estate. The court’s momentous decision includes an expansive analysis of the rivaling valuation testimony. Read more >>

Seven Steps to Managing an Intellectual Property Engagement

There is an inherent flow to managing an intellectual property valuation engagement. In BVR’s publication, Guide to Intellectual Property Valuation, 2nd edition, author Michael Pellegrino outlines the typical process and steps that a valuation professional may want to follow when performing an intellectual property (IP) valuation. Read more >>

Professional Standards for Certified Public Accountants, Economists, and Other Financial Experts

Financial experts may be subject to standards of professional practice from a number of sources when they measure lost profits damages and give related expert testimony. The sources can include governmental regulators as well as professional membership organizations and societies. In addition, a technical community may establish professional standards of practice in other ways. Read more >>

Six Tips for Handling Key Issues in Tricky Bankruptcy Valuations

A number of issues have emerged that analysts will encounter when performing a valuation in a bankruptcy context. Valuation analysts who become involved in bankruptcy-related assignments should expect their work to come under a great deal of scrutiny because most of these engagements are done within a litigation or some other adversarial context, cautioned Robert Reilly, a managing director at Willamette Management Associates, during a BVR webinar back in 2017. While his remarks were made a few years ago, they continue to resonate, and a chapter from Business Valuation and Bankruptcy: Case Law Compendium, 3rd edition, contains more of his timeless advice on how to handle the challenges valuation experts will face. Read more >>

Tips and Techniques for Detecting Misrepresentations in Business Interruption Claims

Business interruption insurance claims are on the rise, and analysts need to be on the lookout for misrepresentations. Michael Haugen, CPA, CFF, CFE (JS Held) conducted a session on this at the recent AICPA FVS Conference, and it’s an area where valuation experts would do well to bolster their knowledge and skills in financial forensics. During his session, Haugen gave some tips on how to “sniff out” misrepresentations in these claims. In the recent Business Valuation Update (BVU) article, “14 Ways to Detect Misrepresentations in Business Interruption Claims,” Haugen classifies specific techniques to detect misrepresentations in business interruption claims. Read more >>

4Q 2020 U.S. Economic Performance Indicators at a Glance: GDP, Consumer Spending, and Unemployment

In today’s constantly changing and evolving economy, business valuators must have a firm grasp of the current state in order to successfully complete a business valuation engagement. The Economic Outlook Update (EOU), published by BVR, digests expansive research from leading authoritative sources into convenient monthly and quarterly reports. Get a sneak peek at the 4Q 2020 EOU with a few key economic performance components showing insights on gross domestic product (GDP), consumer spending, and unemployment and personal income. Read more >>

Seven Techniques to Consider When Calculating Damages for Early-Stage Companies

Measuring lost profits damages for new or early-stage businesses can be a daunting task. Traditional damage analyses that rely on historical results are often meaningless since, by definition, startup companies usually lack a track record of operating results. Without an historical operating history for measuring lost profits, the damages expert walks a thin line between speculation and a reasoned analysis. Under most circumstances, to be admissible evidence, damage analyses require relevant and reliable factual bases. These legal and evidentiary requirements are often heightened when measuring damages for new businesses. Read more >>

Treasure Trove of Data in the 2021 Business Reference Guide

Business valuation experts can find a great deal of useful information in the Business Reference Guide (BRG) by Tom West, which has been updated for 2021. Now in its 31st year, the book contains the latest industry-related information including pricing tips, benchmarking information with comparison data, industry resources, and general industry data on over 600 types of businesses, including franchises. Read more >>

Indiana Supreme Court Issues Key Ruling on Discounts in Compelled Buybacks

Last year, in a compelled buyout, the Court of Appeals sided with the departing minority shareholder when it found discounts did not apply in a closed-market sale. In a freshly minted decision, the Indiana Supreme Court reversed the Court of Appeals, finding there was no blanket rule disallowing discounts in a compelled buyback. This is especially true where the parties exercised a shareholder agreement whose terms suggested the use of fair market value. Read more >>

Prince Estate and IRS Embroiled in Fierce IP Valuation Dispute

Back in January, BVWire ran a news item on a recent article from the Star Tribune. The article states that the executor of the estate of Prince, the late world-famous rock star, and the Internal Revenue Service are currently locked in a fierce estate and gift tax dispute. The IRS argues the executor has seriously undervalued the estate, and the executors claim the IRS’ calculations “are riddled with errors.” Read more >>

Top Expert Answers for Today’s Tough BV Questions

In BVR’s recent webinar, Power Panel: Live Expert Answers for Today’s Tough BV Questions, experts Jay E. Fishman, Michelle Gallagher, Ken Pia, and Jeffrey Tarbell covered various hot topics that affect the business valuation profession. These questions ranged from the basics, such as “What will 2021 look like?” to “What are your thoughts on the current state of the ESOP litigation environment particularly with the new administration coming in?” Here, we summarize five of the questions and answers. For more information, be sure to check out the complete recording and transcript of the session. Read more >>

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