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
The Implied Private Company Pricing Line 2.0 K0 = (FCFF1 / P) + g
Most business appraisal assignments are for private companies with revenue less than $10 million. Current costs of capital (K0) estimation methods rely almost entirely on public security returns. Small privately held companies are different from public eq ...
BVU’s Editorial Board Reflects on the Valuation Profession
BVU has been honored to have so many esteemed valuation professionals on its editorial advisory board over the years. We took the occasion of BVU’s 20th anniversary to invite some current board members to reflect on the state of the profession and the pra ...
Equity risk premium: What is the current evidence?
Are you aware of recent research questioning the use of those realized equity premiums as an estimate of the equity risk premium (ERP)? Or do you simply choose to ignore the research?
Quantifying Company-Specific Risk: A New, Empirical Framework With Practical Applications
In this article, the authors have refined their earlier work1 by providing a detailed example of how to select a company-specific risk premium (CSRP) for a privately held company using benchmark CSRPs derived from guideline publicly traded companies.
BV News and Trends December 2021
A monthly roundup of key developments of interest to business valuation experts.
Is Failure to Apply DLOM a Breach of ESOP Trustee’s Fiduciary Duty?
Court remands case for review of whether ESOP trustee breached its fiduciary duty by failing to apply a marketability discount to large, privately held company stock.
Demand for Executive Compensation Data Lacks ‘Proper Purpose’
Appeals court finds no error in trial court’s rejection of plaintiff’s demand for inspection of corporate records on executive compensation, where expert testimony showed information was not necessary to value plaintiff’s minority interest in company.
Appraisal Malpractice: It’s About Standards, Not the Ultimate Value
In a malpractice action against a real estate appraiser, district court excludes valuation of leasehold interest by plaintiff’s financial expert for failing to comply with any professional standards, and for unreliability under Daubert.
Analysis Leads Chancery Court to Seek Its Own Valuation
The issue in this appraisal action was the value of the shares of two cellular companies (Janesville and Sheboygan).
Analysts Not Required to Predict the Future—Only to Probe Present Facts
In assessing fair value and adequate consideration of ESOP transaction, court considers whether appraiser should have reasonable foreseen future events affecting stock and company value.
Price Paid PA&E Stockholders
This is the latest installment in the lengthy saga of Howard v. Shay , a case of ESOP participants suing for undervaluation on termination of the ESOP and sale of its 38.6% stock interest to a trust controlled by the controlling stockholder.
Expert Qualifications Key to Court Decision
The primary issue in the ESOP litigation the Secretary of the United States Department of Labor (DOL) filed is the fair market value of the Hall Holding Co. stock the Hall Holding ESOP purchased.
Tax Court Determines Methodology, Discounts for Large Block of Public Shares
Tax Court decides appropriate valuation methodology and discounts for a large block (13%) of publicly traded, restricted shares.
Kohler: Textbook Valuation of Large Closely Held Corporation Leads to Total Victory for Taxpayer
A “textbook case” on how to value a large, closely held corporation, complete with discussion of dividend method and appropriate discounts.
Another ‘Must-Read’ Decision From Delaware Chancery on the DCF, Discount Rate, and More
Delaware Chancery Court confirms its preference for the DCF approach in a statutory appraisal action as well as the CAPM for calculating the discount rate and the supply-side ERP, but rejects an adjustment to the size premium to account for the latter.
Buyout Agreement Short-Circuits Court’s Scrutiny of Appraisals
Court says determination of repurchase price of departing partner’s stake is subject to operating agreement giving defendants absolute control over valuation; absent bad faith conduct, court declines to scrutinize appraisals underlying buyout offer.
Insolvency Valuation Plays Key Role in Failed Million-Dollar Merger
Delaware Chancery Court finds buyer knowingly and intentionally breached merger agreement by seeking insolvency opinion to derail financing and avoid liquidated damages.
Court Rejects Income Approach, Says Stock Worth Adjusted NAV
The major issue was the value of stock in an outdoor advertising sign company (SOAI) that the company redeemed on Jan. 25, 1982.
Value Determination Accords With Parties’ Contract, Chancery Says
Court says valuation firm’s determination of value of defendants’ put units accords with agreement to which plaintiff and defendants committed themselves; since contract does not provide for judicial review, court won’t “second-guess” valuator’s judgment.
Taxpayer Scores Partial Success in Cal. Hotel Property Tax Suit
Appeals court says assessor’s version of income approach to determine hotel property taxes violates law because it does not identify, value, and exclude certain intangible assets; but management fee deduction largely captures hotel’s goodwill.
Global BVU News and Trends September 2019
Business valuation news from a global perspective.
BVU News and Trends September 2019
A monthly roundup of key developments of interest to business valuation experts.
Court Adopts Taxpayer Expert’s Method to Value Unlisted Stock of ‘Severely Distressed’ Company
In tax case, court approves refund, finding value of unlisted stock in distressed closely held company that taxpayer received as part of a settlement was less than stated in settlement agreement; taxpayer’s expert showed market value approach was only suitable method to calculate fair market value.
Novel Beta Method Occasions Rebuke From Court of Chancery in Appraisal Case
In appraisal proceeding, Court of Chancery adopts petitioner expert’s DCF-based model for calculating fair value, making slight adjustment to expert’s size premium; on beta calculation, court finds respondent expert’s novel approach “does not survive judicial scrutiny” and raises Daubert issues.