Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
What Business Appraisers Can Learn From the GameStop Saga
The lesson for appraisers in this saga is to be aware of potential pricing issues when using guideline public companies in the Reddit orbit. In the short term, the underlying price may not be representative of its “fundamental value” during the volatile period.
14 Ways to Detect 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 (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. Haugen gives some tips on how to “sniff out” misrepresentations in these claims.
New BVR ‘Power Panel’ Series Offers Seasoned Insights on Timely Issues
The first in a series of “power panel” BVR webinars drew a huge audience and brought together highly experienced thought leaders in the profession to address current issues via questions from the audience. The panel, moderated by Jay E. Fishman (Financial Research Associates), consisted of Michelle F. Gallagher (Adamy Valuation), Ken Pia (Marcum), and Jeffrey S. Tarbell (Houlihan Lokey).
BVU News and Trends April 2021
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends April 2021
Business valuation news from a global perspective.
Do Not Use the Arithmetic Mean to Average Multiples
Valuation professionals should not use the arithmetic mean of multiples. It is mathematically incorrect because it gives excessive weight to high multiples. A multiple is an inverted ratio with price in the numerator. Therefore, the harmonic mean should be used as the appropriate measure of central tendency.
State Supreme Court Affirms Adoption of Selling Shareholder’s Expert Value Findings
In family buyout dispute, state high court affirms trial court’s decision to adopt expert valuation testimony for selling majority shareholder, finding expert’s DCF inputs were reasonable as was selection of multiple of earnings in GPTC analysis; expert’s explanation for S corp premium was convincing.
Global BVU News and Trends March 2021
Business valuation news from a global perspective.
BVU News and Trends March 2021
A monthly roundup of key developments of interest to business valuation experts.
Price Versus Value: A Transaction and Litigation Perspective
According to disciples of modern portfolio theory and its efficient market hypothesis, shares of public companies should always trade at a price equivalent to their economic value, making it impossible for investors to experience short-term arbitrage profits. But try to explain that theory to any hedge fund manager or day trader who purchased or sold GameStop Corp.
Monetary Remedies in Trademark Infringement Litigation
Remedies in the Lanham Act are used to punish wrongdoers in trademark infringement litigation, but courts applying that law have dealt differently with some key issues, especially monetary remedies. This article outlines some such problems and how the courts have dealt with them.
The NICE DLOM Method Gets a Few Shots in the Arm
The nonmarketable investment company evaluation (NICE) method, which first appeared in 2006, is included in leading valuation books but it has not gained much traction and had not appeared in any court cases—until now. Plus, a streamlined version of the model will be out soon, according to the method’s developer, William H. Frazier (W.H. Frazier & Co. Inc.).
Using a Discounted Cash Flow Methodology in Uncertain Times
A fundamental look at the method taking center stage during the pandemic. This article outlines how the DCF method works and to highlight the nuances and trap doors that will be encountered and must be overcome to reliably apply the method to derive an indication of value that is well reasoned and supportable for the application intended.
Assessing Additional Economic Risk Due to COVID-19 (Update)
This is an update to a previously published template that can serve as a framework of thinking about the impact of the coronavirus on a subject company. The author presents a series of questions that help assess the short- and long-term risks with respect to the subject company’s industry, physical operations, financial issues and firm management.
Global Valuers Converge for the Art and Science of Business Valuation Conference
A recap of helpful tips and insights from this conference that attracted close to 300 attendees from all over the world.
Florida Trial Court’s Valuation Findings, Including Personal Goodwill Determination, Do Not Hold Up Under Appeals Court Scrutiny
This divorce case appeal deals with three primary issues: the determination of the value of insurance agency marital asset, the determination of the amount of personal goodwill attaching to the insurance agency, and the appropriate amount of alimony. The court remands the value of the business as it relates to the exclusion by the trial court of the liabilities the business owed, remands as to the appropriate amount of personal goodwill, and remands as to the erroneous level of income of the husband for determination of alimony.
Court Says DOL Claims in ESOP Case Require ‘Fact-Intensive Inquiry’ and Denies Motions for Summary Judgment
In an evolving ESOP case, court says DOL’s allegations that ESOP trustee and various directors engaged in breaches of fiduciary duties and caused the ESOP to enter a prohibited transaction (i.e., overpaid for company stock) require “fact-intensive inquiry” and cannot be resolved on summary judgment.
Supplement: International Glossary of Business Valuation Terms Redlined Version
Download a sample redlined version of the International Glossary of Business Valuation Terms above.
Massive Overhaul of Global BV Glossary in the Works
A major revision is being planned for the International Glossary of Business Valuation Terms, and the team preparing the new glossary wants feedback by January 31 on the proposed changes. The revision would double the size of the glossary by adding over 120 new terms and methodologies to the existing glossary, which has been integrated into the various valuation standards.
Insights, Tips, and Practical Advice From the AICPA FVS Conference
A recap of some valuable takeaways on the use of market transactions, valuations for bankruptcy, valuing private debt, ESOPs, business interruption claims, virtual testimony, and much more.
New Research From Grabowski and Abbott on Recovery and Growth
New upcoming research from Roger Grabowski (Duff & Phelps) and Ashok Abbott (West Virginia University) challenges conventional wisdom about long-term growth rates and economic recovery.
Highlights of 2020 Delaware Valuation Decisions
This article discusses two 2020 Supreme Court decisions and eight decisions by the Court of Chancery.
Practice Growth Opportunity in Valuing Financial Instruments
Valuation practitioners looking for a growth area should consider services related to financial instruments, according to Dr. Joel M. DiCicco (Center for International Business Valuation), speaking at the recent Second Annual Conference on the Art and Science of Business Valuation.
Treasure Trove of Data in the 2021 Business Reference Guide
Here’s a look at what’s in the 31st edition of this guide, including an example of how to value equity using a rule of thumb.
BVU News and Trends February 2021
A monthly roundup of key developments of interest to business valuation experts.