Business Valuation Update

In the July 2022 issue:
  • An Actual Brand Valuation Report a Court Rejected as ‘Speculative’
  • Highlights From the 2022 NYSSCPA BVLS Conference
  • How Judges Compare Competing DCF Analyses
  • Misusing the Market Prices of High-Vote Shares When Estimating a Discount for Lack of Voting Rights, Gilbert E. Matthews
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Welcome to Business Valuation Update
The Business Valuation Update (BVU) has been the voice of the valuation profession since its inception in 1995. Each monthly issue includes new thinking from leading professionals, detailed reports from valuation conferences, analysis of new business valuation approaches, coverage of “landmark” legal cases in key business valuation issues, regulatory and standards updates, and much more!  Learn more and subscribe >>
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Good News in New BVR Survey of Young ASA BV Experts

Preliminary results of a first-ever survey designed to gain some insights and perspectives to help the profession better attract and develop the younger generation of BV practitioners are in. The survey was conducted by BVR and the BV recruiting firm Borrowman Baker with the support of the American Society of Appraisers and was sent to ASA members under 40 years old in the business valuation discipline.

Global BV News and Trends December 2022

Business valuation news from a global perspective.

Appraisers Continue to Be Excluded Most Under Daubert, Per PwC Study

Under Daubert, appraisers were excluded more often in 2021 than any other type of financial expert witness, according to the latest edition of an annual PwC survey. Of the three most common financial experts (economists, accountants, and appraisers), appraisers had a 38% exclusion rate in 2021, followed by accountants (32%) and economists (27%). The article gives more insights into the survey and some ways to avoid a Daubert challenge.

Hot Topics at the 2022 VSCPA Forensic and Valuation Conference

It was back to in-person attendance at the 22nd annual Forensic and Valuation Conference hosted by the Virginia State Society of CPAs. Topics included the income approach, effective recruiting, reasonable compensation, guideline transactions, surviving cross-examination, IRS developments, and a “Hardball With Hitchner” session that covered some front-burner issues.

Pratt’s Document Request Checklist Stands the Test of Time

The new sixth edition of Shannon Pratt’s Valuing a Business does not only contain a great deal of valuation concepts, but also includes some very practical advice and tools. One such tool that has endured is a checklist for an initial request for documents. The list has some minor updates, but it is essentially the same as the one Pratt included in prior editions.

BV News and Trends December 2022

A monthly roundup of key developments of interest to business valuation experts.

New Case Points Up Practice Opportunity in Reasonable Compensation

Opposing counsel attacked a valuation expert over his expertise in assessing reasonable compensation—and also criticized the data he used. The expert prevailed in this challenge, which illustrates that valuation experts can take on engagements in tax matters and shareholder disputes involving the fair market value of executive compensation.

Recap of the New Jersey CPA Society FVS Conference

Some excellent speakers covered litigation tips, malpractice, estate tax audits, statistics for lost profits, cryptocurrency, and divorce matters at the Forensic and Valuation Services Conference hosted by the New Jersey Society of Certified Public Accountants (NJCPA ...

BVR Responds to Hitchner Article on DealStats

This is a response to an article by Jim Hitchner discussing the various transaction databases including BVR’s DealStats. It gives an additional perspective on the private buyer transactions in DealStats.

New Pepperdine Report Creates Buzz at the NACVA Conference

One of the more well-attended sessions at the Business Valuation & Financial Litigation Super Conference hosted by the National Association of Certified Valuators and Analysts (NACVA) was a session Dr. Craig R. Everett conducted. He is the project director of the Private Capital Markets Project from Pepperdine University, which does an ongoing survey of expected rates of return of providers in the private capital market.

Ang Offers SSBV Members More Evidence of the Lack of a Size Effect

Clifford Ang (Compass Lexecon), who offered an impassioned plea to a large group from the UK’s Society of Shares and Business Valuers (SSBV), has become one of the leading proponents of eliminating or minimizing the traditional size premia. Ang has written a number of articles on the size effect and has a new book, Applied Valuation, due out early next year.

Estimating the Extra Risk of Customer Concentration

Interesting comments were made by Roger Grabowski (Kroll), who conducted a session at the American Society of Appraisers International Conference. He discusses the research in this area and how to examine the customer concentration of guideline public companies.

The Two Most Prevalent Methods for Solving the Goodwill Conundrum

Remarks from a session at the AAML/BVR National Divorce Conference conducted by veteran valuers Jay Fishman (Financial Research Associates) and Ken Pia (Marcum) who were joined by attorney Thomas J. Sasser (Sasser, Cestero & Roy).

BV News and Trends November 2022

A monthly roundup of key developments of interest to business valuation experts.

Global BV News and Trends November 2022

Business valuation news from a global perspective.

Recap of the AAML/BVR National Divorce Conference

It was a happy marriage of divorce attorneys and financial experts who gathered together for the AAML/BVR National Divorce Conference in Las Vegas. The AAML is the American Academy of Matrimonial Lawyers.

Young BV Practitioners Speak Out About the Profession

You may be surprised at the comments from a panel of young valuation experts who were asked to give their perspectives on the profession at the recent Business Valuation and Financial Litigation Super Conference hosted by NACVA in Salt Lake City.

Valuation Considerations in High Inflationary Environments

With inflation at its highest level since the Great Inflation, valuation analysts will have to consider macroeconomic factors that have not been present in the U.S. economy in over 20 years.

Accounting for Inflation in the Income Statement Forecast

An example from an actual engagement that demonstrates the manner in which inflation can impact a valuation.

Recap of NACVA’s Summer 2022 ‘Super Conference’

Business Valuation Update traveled to Salt Lake City for the Business Valuation and Financial Litigation Super Conference hosted by the National Association of Certified Valuators and Analysts (NACVA). This is a recap of some of the sessions we attended. Several sessions deserved longer treatment, so we’ve devoted separate articles to them (also in this issue).

Key Industry Updates for Various Types of Stores and Retailers

The economy, high inflation, the Russia-Ukraine war, and the pandemic continue to impact firms in all industries, so it’s important for valuation analysts to keep up with these developments. Here are some recent and very targeted updates for various retail stores from the Vertical IQ industry research platform.

Global BV News and Trends October 2022

Business valuation news from a global perspective.

BV News and Trends October 2022

A monthly roundup of key developments of interest to business valuation experts.

Mercer Examines the State of the BV Profession

In a keynote address at the Business Valuation and Financial Litigation Super Conference hosted by the National Association of Certified Valuators and Analysts (NACVA), Chris Mercer (Mercer Capital) addressed the aging of the profession, consolidation, how the VPOs are adapting, and what the future might hold for valuation theory.

Valuation of Inventory Key to Decision on Collateral Value in Bankruptcy

Second-lien holders, entitled to payment only after the debts of first-lien holders have been discharged, argued that the value of the collateral that secured their claims, as measured on the petition date, vastly exceeded what they had been paid and that they were accordingly entitled to priority payment of the difference. At trial, all parties put on evidence as to the value of the assets at the petition date. The differences varied widely. “The differences among these values turned primarily on how the experts calculated the revenue Debtors could expect to earn from selling their inventory.” The appeal dealt primarily with this inventory issue and how it should be valued. The Bankruptcy Court, affirmed by the district court, used a net orderly liquidation value (NOLV) to determine the value at the petition date. The appellate court affirmed the judgments of the two lower courts.

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