Keep your normalization adjustments separate

That's the recommendation of Garth Tebay--whether non-recurring events, or GAAP adjustments (like the LIFO reserve), type 1 control adjustment (discretionary income, officers' compensation, etc.), strategic adjustments.  "Each one of these adjustment creates a different level of benefit stream, and therefore a different type of value," Tebay told NACVA this afternoon.  Tebay cited Chris Mercer on "type II normalization adjustment," who argues, for minority positions, that the enterprise should be valued as a control level of value, including appropriate normalizations.  Then, minority adjustments can be taken.

BVR is preparing a special report on best practices in normalization adjustments.   Email Jan Davis, Executive Editor, for information.